As the earnings season rolls along, the next REIT to report its earnings is Mapletree Pan Asia Commercial Trust (SGX: N2IU), or MPACT.
As a recap, MPACT owns 18 commercial properties across five territories – Singapore (5), Hong Kong (1), China (2), Japan (9), and South Korea (1) with total assets under management (AUM) of S$16.5 billion as of 31 March 2024.
Anchored by its Singapore core, the commercial REIT announced an admirable financial performance for its fiscal 2024 (FY2024) ending 31 March 2024.
Here are five highlights from MPACT’s latest earnings release.
A year-on-year rise in DPU for 4Q FY2024
MPACT capped off FY2024 with strong numbers reported for the fourth quarter of FY2024 (4Q FY2024).
Gross revenue inched up 2.6% year on year to S$239.2 million while net property income (NPI) improved by 3.2% year on year to S$183.1 million.
Although finance costs rose 10.8% year on year to S$56.4 million for the quarter, MPACT managed to eke out a small 1.8% year-on-year increase in its distribution per unit (DPU) to S$0.0229.
For FY2024, gross revenue increased by 16% year on year to S$958.1 million, buoyed by higher contributions from its Singapore properties due to improved performance.
NPI rose 15.2% year on year to S$727.9 million partly due to the surge in utility costs from higher contracted rates.
For FY2024, DPU dipped by 7.3% year on year to S$0.0891.
MPACT’s portfolio valuation slipped by 0.5% year on year as the increase in valuation of its Singapore properties was offset by the valuation declines for its overseas assets because of the strong Singapore dollar.
The commercial REIT’s Singapore properties saw a 2.7% year on year increase in valuation to S$9.1 billion while its overseas properties’ valuation dipped by 4.1% year on year to S$7.4 billion.
Stable debt metrics
Looking over to the REIT’s debt metrics, aggregate leverage dipped slightly to 40.5% from 40.8% in the previous quarter.
It was also down from the prior year’s 40.9%.
MPACT’s cost of debt has, however, continued to climb, although the rate of increase has slowed.
The commercial REIT’s all-in cost of debt was 3.35% as of 31 March 2024, up from just 2.68% in the previous year.
More than three-quarters of its loans are pegged to fixed rates.
MPACT also has a well-spread-out debt maturity profile with not more than 21% of its loans coming due in any fiscal year.
The REIT manager still has available debt facilities of around S$1.5 billion that it can draw on for acquisitions.
High occupancy with positive rental reversions
MPACT’s portfolio occupancy stood high at 96.1% for FY2024 with a tenant retention rate healthy at 72.5%.
Drilling down by region, the REIT’s China properties recorded the lowest occupancy rate of 86.5%, down slightly from 87.5% a year ago.
However, both VivoCity and Festival Walk sustained very high occupancies of 99% and above which helps to mitigate the impact of MPACT’s Chinese properties.
The portfolio’s overall rental reversion came in at a positive 2.9%.
MPACT’s Singapore properties reported healthy positive rental reversions with VivoCity seeing a 14% rental reversion
The good performance was offset somewhat by negative rental reversions for Festival Walk and the REIT’s China and Japan properties.
Improved tenant sales for VivoCity and Festival Walk
Both footfall and tenant sales continued to climb for the two key malls within MPACT’s portfolio.
VivoCity saw shopper traffic improve by 10.1% year on year for FY2024 to 43.9 million.
Tenant sales hit S$1.1 billion, a new record, and were up 2.6% year on year.
Festival Walk also saw better operating numbers with shopper traffic inching up 0.6% year on year to 30 million and tenant sales improving by 0.1% year on year to HK$3.9 billion.
Revitalising mall spaces to improve footfall
The REIT manager continues to revitalise mall spaces and maximise retail space potential to improve footfall and increase rental income potential.
VivoCity completed its sixth asset enhancement initiative (AEI) back in May 2023 with around 80,000 square feet reconfigured.
In addition, the level one food and beverage cluster reconfiguration was also completed and opened in 3Q FY2024, generating a return on investment of more than 20%.
Festival Walk achieved success in attracting shoppers with festive events such as the Chinese New Year Celebration 2024 and performances for the Ching Ming Festival.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
