After market hours yesterday (26 January 2022), blue-chip retail, office, and business park REIT Mapletree Commercial Trust (SGX:N2IU) posted its business updates for the third quarter, and also for the first 9 months of the current financial year ended 31 December 2021.

For those of you who are not too familiar with the REIT, a brief introduction – at the time of writing, all of the REIT’s properties are located in Singapore, with all but one of them located in the Harbourfront precinct. The properties in its portfolio include VivoCity, Mapletree Business City, mTower (previously known as PSA Building), Mapletree Anson, and Bank of America Merrill Lynch Harbourfront. The REIT was in the news recently with its proposed merger with another Mapletree REIT in Mapletree North Asia Commercial Trust, with the enlarged REIT to be renamed as Mapletree Pan Asia Commercial Trust – you can read details about it in a separate post here, and also in an Instagram post here.

As the REIT have switched to half-yearly reporting, it only provided a summary of the key financial figures this time round. Also, as the REIT have also switched to paying out a distribution on a half-yearly basis, there isn’t any distribution declared by the REIT for the current quarter under review.

In the remainder of this post, you’ll find essentials about the REIT’s key financial results (where I will be comparing it on a quarter-on-quarter, as well as on a year-on-year basis), portfolio occupancy and debt profile (where I will be comparing stats reported for the current quarter under review against that reported in the previous quarter), along with my thoughts about it.

Let’s begin.

Key Financial Results (9M FY2020/21 vs. 9M FY2021/22, and Q3 FY2020/21 vs. Q3 FY2021/22)

In this section, you’ll find the REIT’s key financial results they have provided for the first 9 months of the current financial year 2021/22, compared against the same time period last year, as well as results for the third quarter (the REIT did not provide these figures – I have calculated them based on the the figures provided in the for the first half and for the first 9 months of the financial year):

9M FY2020/21 vs. 9M FY2021/22:

9M FY2020/219M FY2021/22% Variance
Gross Revenue
(S$’mil)		$348.7m$374.0m+7.3%
Property Operating
Expenses (S$’mil)		$72.8m$82.7m+13.6%
Net Property
Income (S$’mil)		$275.9m$291.3m+5.6%

On a year-on-year (y-o-y) basis, the REIT’s latest set of financial results is a stable one – with improvements in its gross revenue and net property income due to lower rental rebates given out to tenants affected by the Covid-19 pandemic compared to last year, along with a higher compensation received from lease pre-terminations.

Q3 FY2020/21 vs. Q3 FY2021/22:

Q3 FY2020/21Q3 FY2021/22% Variance
Gross Revenue
(S$’mil)		$130.0m$130.3m+0.2%
Property Operating
Expenses (S$’mil)		$25.6m$28.8m+12.7%
Net Property
Income (S$’mil)		$104.4m$101.5m-2.9%

If I were to look at its results on a quarter-on-quarter (q-o-q) basis, its rather muted compared to the same time period last year – with its gross revenue inching up by just 0.2%, and its net property income down by 2.9%.

Portfolio Occupancy Profile (Q2 FY2021/22 vs. Q3 FY2021/22)

Moving on, let us take a look at the REIT’s portfolio occupancy profile.

Like I’ve mentioned in the introductory paragraph, I will be comparing the statistics reported for the current quarter under review (i.e. Q3 FY2021/22 ended 31 December 2021) against that reported in the previous quarter 3 months ago (i.e. Q2 FY2021/22 ended 30 September 2021) to find out whether or not they have continued to remain resilient, or have weakened:

Q2 FY2021/22Q3 FY2021/22
Portfolio Occupancy
(Committed) (%)		96.0%96.3%
Portfolio WALE
(years)		2.8 years2.7 years

My Observations: Compared to the previous quarter, Mapletree Commercial Trust’s portfolio occupancy continues to remain resilient, with its committed portfolio occupancy up by 0.3 percentage points – largely attributed to mTower’s committed occupancy jumping up from 80.4% in Q2 FY2021/22 to 87.6% in Q3 FY2021/22.

However, if I were to drill down a bit further, I noticed that the committed occupancy rates for the REIT’s other 3 properties have declined:

  • VivoCity (down from 99.6% in Q2 FY2021/22 to 98.4% in Q3 FY2021/22)
  • Mapletree Business City (down from 97.0% in Q2 FY2021/22 to 96.7% in Q3 FY2021/22)
  • Mapletree Anson (down from 97.0% in Q2 FY2021/22 to 95.9% in Q3 FY2021/22)

Merrill Lynch Harbourfront continues to remain fully occupied in both quarters (i.e. in the second and third quarters of FY2021/22) that I’ve looked at.

Finally, in the remaining quarter of the current financial year, 0.5% of the leases in its retail will be up for renewal. For the coming financial year 2022/23, 12.2% and 11.3% of the leases in its retail and office/business park segments respectively will be up for renewal.

Debt Profile (Q2 FY2021/22 vs. Q3 FY2021/22)

Just like how I have reviewed its portfolio occupancy in the previous section, I will also be reviewing the REIT’s debt profile by putting the statistics reported for the current quarter under review beside the statistics reported in the previous quarter 3 months ago, and you can find them in the table below:

Q2 FY2021/22Q3 FY2021/22
Aggregate Leverage
(%)		33.7%34.1%
Interest Coverage
Ratio (times)		4.8x4.8x
Average Term to
Debt Maturity (years)		3.8 years3.5 years
Average Cost of
Debt (%)		2.4%2.4%

My Observations: Even though its aggregate leverage have gone up by 0.4 percentage points from the last quarter, but it still remains very healthy in my opinion, with plenty of debt headroom to go before the regulatory limit of 50.0% (it is at this level because the REIT has maintained an interest coverage ratio of 2.5x) is reached.

As far as its debt maturity is concerned, there are no more borrowings due for refinancing in the remaining quarter of the current financial year. In the coming financial year 2022/23 ahead, 15% (or S$464.0m) of its borrowings will be maturing, with another 9% (or S$262.0m) maturing in FY2023/24, and another 24% (or S$725m) maturing in FY2024/25. A huge bulk of its borrowings (51%, or S$1,563m) will only be maturing in FY2025/26 and beyond.

Closing Thoughts

A fair set of results reported by the REIT in my opinion – with its financial performance remaining stable, along with its debt profile remaining healthy (with its aggregate leverage having a good debt headroom before the regulatory limit is reached.)

While its portfolio occupancy (if you look at it by individual properties) have weakened slightly compared to the previous quarter 3 months ago, but the good thing is that the occupancy rates have been maintained at above 95.0% (apart from mTower – but it has seen an improvement in its occupancy rate compared to the previous quarter.)

With that, I have come to the end of my review of blue-chip Mapletree Commercial Trust’s latest business updates for the third quarter, as well as for the first nine-months of the current financial year ended 31 December 2021. As always, I do hope you’ve found the contents presented above useful, and do take note that they certainly do not represent any buy or sell calls for the REIT’s units. You’re strongly advised to do your own due diligence before you make any investment decisions.

Related Documents

Disclaimer: At the time of writing, I am a unitholder of Mapletree Commercial Trust.

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