Mapletree Commercial Trust - UOB Kay Hian 2021-07-26: 1QFY22 COVID-19-Hardened, Weathering A Temporary Bump


Mapletree Commercial Trust - 1QFY22 COVID-19-Hardened, Weathering A Temporary Bump

  • VivoCity maintained high committed occupancy of 99.4% in 1QFY22. Mapletree Commercial Trust swiftly rolled out rental rebates of about 0.6 months of fixed rents to eligible retail tenants due to Phase 2 (Heightened Alert). Occupancy at MBC dipped temporarily by 1.1ppt q-o-q to 93.1% but new tenants secured are expected to improve occupancy by 3.5ppt to 96.6%.
  • Mapletree Commercial Trust’s properties are strategically located to benefit from Sentosa-Brani Master Plan and GSW. Maintain BUY. Target price: S$2.48.

Mapletree Commercial Trust's 1QFY22 Results

  • Mapletree Commercial Trust (SGX:N2IU) reported growth in gross revenue and net property income (NPI) of 23.7% and 22.9% y-o-y respectively in its 1QFY22 business update.
  • VivoCity: Weathering Phase 2 (Heightened Alert). Gross revenue and NPI from VivoCity dropped 21% and 20% q-o-q respectively in 1QFY22 dampened by Phase 2 (Heightened Alert) from 16 May to 13 June, which resulted in a 5-week cessation of dinning-in at all F&B establishments. Mapletree Commercial Trust swiftly rolled out rental rebates of about 0.6 months of fixed rents to eligible retail tenants. It curated exciting concepts for shoppers, such as DJI (renowned maker of camera drone) and Foot Locker (popular sneaker brand).
  • Committed occupancy remains high at 99.4%. The negative impact from Phase 2 (Heightened Alert) was less severe than Circuit Breaker last year when non-essential businesses were closed for 10 weeks. Shopper traffic and tenant sales dropped 21% and 20% q-o-q respectively in 1QFY22. Thus, rental rebates were commensurately less.
  • Office/Business Park: Temporary boost from one-off compensation. Gross revenue and NPI from the office/business park segment grew 7.6% and 7.7% y-o-y respectively in 1QFY22 due to compensation received from the pre-terminated lease at mTower. The replacement tenant for space vacated by PSA Corporation pre-terminated before the new lease commenced and has agreed to pay compensation amounting to 16 months of rent, representing one-off income of about S$7m. Committed occupancy for mTower remains low at 76.7%. Mapletree Commercial Trust has one year of lead time to backfill the vacant space at mTower.
  • Occupancy for MBC dipped temporarily by 1.1ppt q-o-q to 93.1%. New tenants secured are expected to improve occupancy by 3.5ppt to 96.6%. Merrill Lynch HarbourFront (MLHF) continues to maintain full occupancy.
  • Maintains resilient balance sheet. Aggregate leverage is low at 34.2%. The average all-in cost of debt improved 0.17ppt y-o-y to 2.44%. Mapletree Commercial Trust has cash and undrawn committed facilities of more than S$400m, which provides financial flexibility. Its debt maturity is well spread out with no more than 24% of debt due in any financial year. Mapletree Commercial Trust has completed all refinancing for FY22.


  • A temporary setback. The multi-ministry taskforce has tightened community safe management measures back to Phase 2 (Heightened Alert) from 22 July to 18 August. The permissible group size for social gatherings was reduced from five to two persons. F&B establishments can only provide takeaway and delivery options. Operating capacity for shopping malls was reduced from 10sqm to 16sqm of gross floor area per person.
  • Social distancing measures could be substantially eased by October. Sporadic lockdowns are detrimental to economic recovery. Instead of trying to eradicate COVID-19, we have to learn to live with it. In the US, the states of California and New York have dropped all social distancing measures when vaccination rates crossed 70%. In Singapore, the government has set a new target whereby 75% of the population will be fully vaccinated by October. Achieving the important milestone could pave the way for social distancing measures to be substantially eased.
  • Strategic location benefitting from government’s long-term plans. Mapletree Commercial Trust has five properties located in the HarbourFront area, which accounted for 91.4% of its portfolio valuation in aggregate. Thus, it will benefit immensely from the development of the Greater Southern Waterfront (GSW) and rejuvenation of Sentosa Island and Pulau Brani.
  • Beneficiary of Sentosa-Brani Master Plan. Sentosa Island and Pulau Brani will be redeveloped into five distinct zones, namely the Vibrant Cluster, Island Heart, Waterfront, Ridgeline and Beachfront. Each zone will deliver unique experiences, such as nature and heritage trails, adventure attractions, eco-resorts, water shows and beach events. Vibrant Cluster, which spans both islands, will have large-scale attractions. Waterfront on Pulau Brani will house a “futuristic” discovery park.
  • Sentosa-Brani Master Plan will be rolled out over the next 20-30 years. Phase 1 of the Master Plan named “Sentosa Sensoryscape”, a two-tiered linkway connecting Resorts World Sentosa and the Southern Beaches, will be completed in 2022.
  • HarbourFront precinct at the heart of GSW. GSW covers 1,000ha of land stretching across the southern coastline from Pasir Panjang to Marina East which will be freed up for development after the City Terminals and Pasir Panjang Terminal relocate to Tuas Mega Port. Keppel Club will be one of the first developments in the GSW. Up to 9,000 new residential homes (both public and private) could be built on the Keppel Club site when the current lease expires in 2021. Residents could easily access VivoCity via the MRT through Labrador Park and Telok Blangah MRT stations on the Circle line.


  • We have assumed that Mapletree Commercial Trust would provide rental rebate of another 0.6 months of fixed rents to eligible retail tenants in 2QFY22. Thus, we cut our FY22 DPU forecast by 6.5% to S$0.094. Our estimates for FY23 and FY24 DPU remain largely unchanged.



  • Gradual but steady recovery in shopper traffic and tenant sales, accompanied by progressive easing of social distancing measures.
  • GSW will increase the population of residents staying within VivoCity’s catchment area. Its office buildings, namely MBC I, MBC II, mTower and Merrill Lynch HarbourFront (MLHF), will benefit from an expanded pool of potential employees.
  • ism attractions at Sentosa and Pulau Brani, which will improve shopper traffic and tenant sales at VivoCity.

Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2021-07-26
SGX Stock Analyst Report BUY MAINTAIN BUY 2.48 DOWN 2.500