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Mapletree NAC Trust Is Impacted By The Festival Walk's Damage




Key Highlights:

  • Mapletree North Asia Commercial Trust (SGX: RW0U)'s 3Q19 DPU dropped 13.3%

  • The annualised yield and price to book ratio are 5.6% and 0.88 respectively


1. Dividends


Net property income had a sharp drop of 40% to $50.8m. The drop was mainly due to closure of Festival Walk as it was damaged by the protestors during the riot last year. The lower occupancy rate of Gateway Plaza also contributed to the poor performance.


The annualised yield is 5.6%. Although the REIT has been delivering growing DPUs over the years, it would very likely to record a lower DPUs this year due to the income impact of Festival Walk (contributed more than 60% of its net property income).


Source: reitscompass's REITs Insider ratings



2. Portfolio


Portfolio occupancy dropped slightly to 96.3%, with 21.6% of gross rental income is up for renewal next year. The portfolio leverage is currently at the healthy side of 37.1%. The interest cost is 2.46%, the good news is downside risk is hedged with 88% of the loans are on fixed rates.


It is currently trading at a price to book ratio of 0.88.



3. Growth Catalyst


The good news is that the damage at Festival Walk is covered by insurance. The claiming process is still on-going, any excess on the claim will be distributed to the unitholders.


Besides, the REIT manager also proposed to acquire two properties in Japan as part of the effort to reduce concentration risk of Festival Walk.


On the other hand, the slow down in China economy and the increase in office supply will put some pressure on its properties in Beijing and Shanghai.



Summary


Mapletree NAC Trust has been performing well in the past. While the one-off incident in Festival Walk was unexpected, but the impact on the REIT's performance is huge. The DPUs in the coming quarters are likely to be affected.



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