Mapletree Commercial Trust (SGX:N2IU) Continues To Deliver Strong Results



Mapletree Commercial Trust (SGX: N2IU) has recently announced its first half 2020 financial results. It is currently trading at 4.4% yield based on the last traded share price of $1.90.


Key Highlights:


  • Distribution per unit (DPU) and Dividend Yield (4.4%)

  • Price to book ratio (1.1)

  • Gearing (33.8%)

  • Interest coverage ratio (4.0x)

  • Portfolio occupancy rate (96.1%)

  • Growth catalyst


Background of Mapletree Commercial Trust


Mapletree Commercial Trust manages six office and retail properties in Singapore, which includes

  1. VivoCity

  2. Mapletree Business City I

  3. Mapletree Anson

  4. Bank of America Merrill Lynch HarbourFront

  5. PSA Building

  6. MBC II

The REIT is sponsored by Mapletree Investments, a property developer based in Singapore.


1. Distribution per unit and dividend yield


Based on its 1H financial results, Mapletree Commercial Trust's net property income dropped 2.6% to $171m. This was mainly due to the rental rebates given to its retail tenants during this pandemic period. The rental rebate was partially offset by contribution from MBC II.


Based on its latest price, the REIT is currently trading at about 4.4% dividend yield. Historically, the REIT has been paying very consistent DPU, with steady growth over the years. However, its current 4.4% yield is slightly lower as compared to its average yield of 5.8% over the past 8 years.




2. Price to book ratio


Mapletree Commercial Trust is currently trading at 1.1 price to book ratio, which is at the same level as its 8-year historical average.



3. Gearing


Portfolio leverage remains low at 33.8%, with an average debt tenor of 4.5 years. The REIT continues to maintain a well distributed debt profile, with only 5% of debt required to refinance in the next 2 years.


Mapletree Commercial Trust's Debt Profile

4. Interest coverage ratio


The REIT has an interest coverage ratio of 4.0 times, which is just at our preference of 4 times. Besides, the REIT maintains a low interest cost of 2.57%, with more than 71.5% of its debt is hedged with fixed rate.


5. Portfolio occupancy rate


Portfolio maintains high occupancy rate at 96.1%. Overall, the REIT experienced better occupancy rate across all its assets except Mapletree Anson.

Source: Mapletree Commercial Trust's Presentation Slide


6. Growth Catalyst


The REIT manager said that the trust continues to see progressive recovery of shopper traffic and rebound in tenant sales since the Phase 2 re-opening. The REIT is in general positive on the retail segment and expects further improvement once we move to phase 3.


Mapletree Commercial Trust continue to derive stable cashflows from high quality tenants. In particular, the two new assets, MBC II and MBC I are expected to provide stability and support in such uncertain times.


Summary


While the REIT maintains healthy balance sheet, we expect the further improvement on the REIT performance in the coming quarters. With a 4.4% yield, its current share price does not look attractive, we will remain the REIT in the watchlist.



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