SINGAPORE (Sept 16): In the last 20 years, the growing universe of real estate investment trusts — with its track record of comparative stability and steady returns and a combined market value of about $100 billion — has helped the Singapore Exchange become a global hub for REITs to list.
Still, despite the entry of more foreign players, the Singapore-based plays have held their own. For this year’s Billion Dollar Club awards, the Mapletree family made a clean sweep in the REITs and business trusts sector.
Mapletree Commercial Trust (MCT) was ranked the overall winner in the sector. It had the highest score for the growth in profit after tax category as well. Its environmental, social and governance score of 17.22 points was not the top in this metric, but put it somewhere in the middle in the REITs sector compared with top scorer CapitaLand Commercial Trust, which garnered 20.64 points. Mapletree Industrial Trust (MIT), on the other hand, scored highest in the return on equity (ROE) category. Mapletree Logistics Trust (MLT), meanwhile, scored highest for shareholders’ returns. The Mapletree family of REITs consists of a fourth member: Mapletree North Asia Commercial Trust.
MCT’s portfolio comprises VivoCity, one of the largest and busiest malls in Singapore; Mapletree Business City I; PSA Building; Mapletree Anson; and Bank of America Merrill Lynch HarbourFront. These five assets, with their good mix of prime retail and commercial space, have a total net lettable area of 3.9 million sq ft and a total value of about $7 billion.
VivoCity was the key asset when MCT was listed, and it remains the jewel in its portfolio. In February this year, VivoCity’s anchor tenant, Giant supermarket, put up the shutters as part of parent company Dairy Farm International Holdings’ restructuring of its regional supermarket business. But NTUC FairPrice soon came in to take over the 91,000 sq ft space vacated by Giant. “We are proud to report good progress on the changeover of anchor tenant space in VivoCity. NTUC FairPrice successfully soft-launched its largest and most advanced store in Singapore on July 16,” says Sharon Lim, CEO of MCT’s manager, Mapletree Commercial Trust Management. NTUC FairPrice at VivoCity has new concepts such as dedicated corners for speciality coffee.
For 1Q ended June 30, MCT posted income available for distribution of $67.3 million, up 4.1% y-o-y. Distribution per unit (DPU) was 2.31 cents, an increase of 3.6% y-o-y. Revenue in the same period was $112.1 million, up 3.3% y-o-y. Despite concerns that e-commerce will replace physical retail, VivoCity was able to maintain a committed occupancy of 99.8% as at June 30.
The main reason for MCT’s high score was its track record in growing its distributable income in the last three financial years — a category in which it led its sector peers. For FY ended March 31, 2017, MCT’s distributable income was $227.2 million, a whopping 31.7% increase. This number grew again in FY ended March 31, 2018 to $260.4 million before slowing down to increase 1.4% to $264 million in FY ended March 31, 2019.
With the national Great Southern Waterfront redevelopment master plan being put in motion, MCT has been viewed by analysts as a strong beneficiary. In an Aug 19 report by DBS Group Research, Derek Tan says VivoCity will benefit significantly from the rejuvenation of GSW. “We believe there will be greater benefits to the mall over time with the expected increase in residential apartments, working population, and new tourism elements added to the GSW.”
MIT, which focuses on industrial properties, was the leader in the ROE category within this sector. In the three-year period of evaluation, MIT had an ROE of 8.2%. MIT’s property portfolio comprises 87 industrial properties in Singapore and 14 data centres in the US, via its 40% interest through a joint venture with Mapletree Investments. The properties in Singapore include flatted factories, business park buildings, stack-up/ramp-up buildings, light industrial buildings and a new category called “hi-tech buildings”. As at June 30, MIT’s assets under management totalled $4.8 billion.
For 1Q ended June 30, MIT recorded distributable income of $3.2 million, up 11.1% y-o-y. DPU was 3.1 cents, up 3.3% y-o-y. Revenue in the period was $99.6 million, an 8.8% y-o-y increase. Mapletree Industrial Trust Management, the manager, attributed the higher income during the quarter to contribution from MIT’s 40% interest in a number of data centres in the US. Data centres, needed in ever-growing capacity to store and manage the explosion of digital storage and computing space, are seen as a hot, new growing industrial asset class.
MIT will be paying more attention to “hitech buildings” as a new segment. In Singapore, for example, it will spend $263 million to redevelop the existing Kolam Ayer 2 flatted factory cluster into a hi-tech industrial precinct that can command higher rents and better utilise untapped ratio. “The hi-tech buildings segment will continue to underpin our efforts to strengthen MIT’s growth profile,” says Tham Kuo Wei, CEO of MIT’s manager.
Since its listing in July 2005, MLT has accumulated a portfolio of 137 properties worth $7.9 billion as at June 30, 2019. Nearly half of these properties, or 52, are in Singapore. The remainder are spread quite evenly in Hong Kong, Japan, Australia, South Korea, China, Malaysia and Vietnam.
For 1Q ended June 30, the amount distributable to unitholders was $73.6 million, up 20.8% y-o-y. DPU was 2.025 cents, 3.5% higher than the 1.957 cents in the year-earlier quarter. Revenue was $119.8 million, up 13.6% y-o-y. “We have achieved another set of stable results, underpinned by our focus on proactive lease management and contributions from an enlarged portfolio,” says Ng Kiat, CEO of Mapletree Logistics Trust Management, the manager. “Amid growing economic uncertainties, we will remain disciplined on driving stability in the portfolio while maintaining a firm focus on rejuvenation to strengthen MLT’s resilience,” she adds.
MLT’s share price, over the three-year evaluation period, was up 13.3%, making it top in the shareholders’ returns category.
*For the full list, go to bdc.theedgesingapore.com
CENTURION CLUB: REITS AND BUSINESS TRUSTS
Accordia Golf Trust bets on ‘new stars’ to spur interest in golf
Accordia Golf Trust, which owns a portfolio of golf courses in Japan, was the winner in the REITs and business trust sector in the inaugural Centurion Club.
The trust, which was listed on the Singapore Exchange in August 2014, owns a portfolio of 88 golf courses. As at Dec 31, 2018, the golf courses had an appraised value of about ¥144.7 billion ($1.87 billion). About 70% of the golf courses are located in the three largest metropolitan areas of Japan: Tokyo, Osaka and Nagoya. For the three months to June 30, Accordia’s golf courses were used by about 1.6 million players, up 3% y-o-y, although revenue per player was down marginally by 1% y-o-y to ¥8,475. Distributable income for the quarter increased 35.2% y-o-y to ¥2,251 million, which translates into a distribution per unit of 2.57 Singapore cents, up from 1.86 cents in the year-earlier period.
The popularity of golf as a sport has been in question in recent years. Golf is quite often associated with the image of older men who talk business and cut deals while walking on the course. According to Accordia Golf Trust Management, it hopes that new star golf players, such as Hinako Shibuno, winner of the Women’s British Open, and the comeback of Ryo Ishikawa, winner of the Japan PGA Championship 2019, will spike interest among a younger generation of players — and thereby help ensure that its portfolio of golf courses remain of value
