Mapletree Commercial Trust fiscal 2Q net property income rises nearly 2 percent

Singapore’s VivoCity mall, owned by Mapletree Commercial TrustSingapore’s VivoCity mall, owned by Mapletree Commercial Trust Note: Photo taken pre-Covid

Mapletree Commercial Trust reported Tuesday its fiscal second quarter net property income rose 1.7 percent on-year to S$87.72 million on higher contributions from the VivoCity, Mapletree Business City I, PSA Building and Bank of America Merrill Lynch HarbourFront (MLHF) properties.

Gross revenue for the quarter ended 30 September increased 1.9 percent on-year to S$112.04 million, the REIT said in a filing to SGX.

The distribution per unit (DPU) rose to 2.32 Singapore cents a share, up 2.2 percent from 2.27 Singapore cents in the year-ago quarter, the filing said.

Sharon Lim, CEO of Mapletree Commercial Trust Management, the REIT’s manager, said VivoCity was its “crown jewel,” posting a 5.1 percent increase in gross revenue and a 4.9 percent rise in net property income in the second quarter.

“Momentum of shopper traffic and tenant sales at VivoCity has picked up with the progressive opening of new stores on Basement 2 and Level 1 during 2Q FY19/20, as well as NTUC FairPrice commencing and contributing full month from August 2019,” the trust said.

It added that as of 30 September, VivoCity’s occupancy was fully committed.

For the fiscal first half, Mapletree Commercial Trust reported its net property income rose 2.2 percent on-year to S$176.07 million on gross revenue of S$224.17 million, up 2.6 percent on-year. The DPU for the fiscal first half was 4.63 Singapore cents, up 2.9 percent from 4.50 Singapore cents in the year-ago quarter, the trust said.

The office/business park assets posted gross revenue and net property income rose 0.4 percent and 0.2 percent on-year, respectively, for the first half, the filing said.

“This was driven by higher rental income from the renewed leases at PSA Building, higher rental income from new leases at MBC I, and the effects of step-up rents in existing leases at both MBC I and MLHF,” the trust said. Occupancy remained high, with the PSA Building 93.1 percent committed, while MLHF was fully occupied, it said.

In its outlook, the trust pointed to clouds on the horizon for both the retail and office segments.

“Consumer confidence turned slightly more pessimistic on persisting concerns over job prospects and the economy,” the trust said.

The office market also showed mixed signals in the second quarter, the filing said.

“There was positive net absorption contributed by healthy take-up in recently completed buildings,” the trust said. “However, there was generally more caution portrayed by firms as they ascertain the full impact of the trade war. Economic uncertainty and occupiers’ resistance to landlords’ rental expectations weighed on new leasing enquiries, which resulted in leasing deals taking a longer time to conclude and a deceleration of Grade A (Core CBD) rental growth.”

However, the trust said it expected its portfolio would remain resilient on VivoCity’s strong positioning and manageable lease expiries in the office/business park properties.

Mapletree Commercial Trust also said it obtained unitholders’ approval Tuesday for its proposed acquisition of Mapletree Business City phase 2 (MBC II) and the common premises at the campus.

“As a top-quality asset, it is an excellent fit with the existing portfolio,” Lim said in the statement. “It reinforces MCT’s foothold in the Alexandra Precinct, giving us greater economies of scale and flexibility in meeting tenant requirements. Post-acquisition, MCT’s portfolio will be further elevated, with best-in-class assets, namely VivoCity, MBC I and MBC II, making up approximately 80 percent of the enlarged portfolio’s valuation and net property income.”

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