Mapletree Pan Asia Commercial Trust (MPACT) N2IU has declared 12.8% lower distribution per unit (DPU) y-o-y of 2.18 cents for 1QFY2024 ended June, despite gross revenue and net property income (NPI) for the quarter growing 75.6% and 68.0% y-o-y to $237.1 million and $179.2 million respectively.
The REIT’s manager says the y-o-y surges were driven by the effects of the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust in June 2022.
MPACT’s Singapore assets also played a part, says the manager on July 31. Its Singapore assets recorded a $5.5 million revenue growth, mitigating the impact of higher utility expenses, which grew 392.1% y-o-y and 5.5% to nearly $10 million for the quarter.
Compared to the previous quarter, MPACT's revenue and NPI grew 1.6% and 1.0%, while its DPU fell 3.1%.
Finance costs, meanwhile, grew 183.6% y-o-y and 6.2% q-o-q to $54.1 million during the quarter. The manager says higher net finance costs were mainly due to higher interest rates, resulting in a lower amount available for distribution to unitholders and DPU.
Sharon Lim, chief executive officer of the manager, says: “We must acknowledge that our financial performance was impacted by broader market dynamics, including increased utility costs and higher interest rates. Because of the stronger Singapore dollar, contributions from the overseas properties were also impacted by foreign exchange effects when translated into Singapore dollars.”
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As at June 30, portfolio committed occupancy was 95.7%, while weighted average lease expiry (WALE) for MPACT’s retail and office/business park leases was 2.2 years and 2.8 years respectively, translating into an overall portfolio WALE of 2.6 years.
During the quarter, MPACT renewed and re-let close to 690,000 sq ft of lettable area, including securing a lease renewal with a major tenant at Sandhill Plaza in Shanghai.
The backfilling efforts for mTower in Singapore continued to yield positive results, says the REIT’s manager, leading to a further improvement in its committed occupancy to 94.6%.
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All markets except Greater China recorded positive rental uplifts, contributing to a portfolio rental reversion of 2.4%. In particular, the properties in Singapore achieved “strong” rental uplifts ranging from 7.1% at Mapletree Business City to 12.3% at VivoCity, says the manager.
To mitigate uncertainties arising from interest rate and foreign exchange volatilities, approximately 74.2% of the total gross debt of $6.9 billion was fixed through fixed rate debt or financial derivatives, and approximately 92% of MPACT’s expected distributable income (based on rolling four quarters) was derived from or hedged into Singapore dollars. No more than 22% of MPACT’s debt will expire in any financial year.
As at June 30, MPACT’s gearing was 40.7%, down from 40.9% at the previous quarter and up from 33.8% this time last year.
MPACT's net asset value per unit stood at $1.75 at the end of the quarter.
“As we progress into 2023, our resilience stems from the strength of our core assets, and the high occupancies resulting from key lease renewals within the portfolio,” says Lim. “We will maintain our agility and proactive approach in driving our assets while effectively adapting to market changes. Preserving the stability of our balance sheet remains a top priority for us.”
Units in Mapletree Pan Asia Commercial Trust closed 3 cents lower, or 1.79% down, at $1.65 on July 31.
