MAPLETREE Pan Asia Commercial Trust : N2IU 0%’s (MPACT) distribution per unit (DPU) for the fourth quarter ended March grew 1.8 per cent year on year to S$0.0229 from S$0.0225 previously.

Unitholders can expect to receive the distribution payout on Jun 6 after book closure on May 3. 

The real estate investment trust’s (Reit) gross revenue grew 2.6 per cent to S$239.2 million, while net property income (NPI) for the quarter rose 3.2 per cent to S$183.1 million with an NPI margin of 76.6 per cent.

On Wednesday (Apr 24), MPACT’s manager attributed the improved financial metrics to a strong Singapore performance and stable contributions from the Reit’s asset in Hong Kong, Festival Walk.

This led to overall NPI growth more than covering net finance costs for the quarter, which grew 10.8 per cent to S$56.4 million due to higher interest rates on Singapore and Hong Kong dollar-denominated borrowings.

The figures exclude contributions from MPACT’s The Pinnacle Gangnam asset in Seoul, for which profit after tax will be shared based on the trust’s 50 per cent effective interest in the property.

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MPACT’s DPU for the full year stood at S$0.0891, down 7.3 per cent from S$0.0961 a year prior, as the manager said the full-year distribution was moderated by higher interest rates.

Gross revenue for the full year grew 16 per cent to S$958.1 million, while NPI rose 15.2 per cent to S$727.9 million.

The amount available for distribution to unitholders grew 5.2 per cent on the year to S$468.6 million. 

As at end-March 2024, MPACT’s portfolio occupancy stood at 96.1 per cent – down from 96.7 per cent as at end-2023, but higher than the 95.4 per cent portfolio occupancy in the same period a year ago.

The manager said that this year-on-year improvement largely stemmed from the success in backfilling the Reit’s mTower asset.

Sharon Lim, chief executive of the manager, also noted that the Reit’s flagship asset VivoCity “showcased all-rounded excellence” as it achieved a new record in full-year tenant sales to bring MPACT’s overall portfolio to an “outstanding 14 per cent rental uplift”.

Overall portfolio tenant retention rate was 72.5 per cent, with a weighted average lease expiry of 2.4 years.

MPACT open to share buyback

With a gearing of 40.5 per cent and an average term to maturity of debt of three years, MPACT’s manager added that the Reit’s debt maturity profile remained “well-staggered” with no single financing year facing more than 21 per cent of debt refinancing.

The Reit manager also noted “ample financial liquidity” for MPACT to meet its working capital needs and financial obligations, given an estimated S$1.5 billion of cash and undrawn committed facilities available.

“Our Singapore assets have consistently delivered. With this market’s inherent stability, it will remain a significant component of our assets under management and NPI, reinforcing MPACT’s foundational strength,” said Lim.

Speaking at MPACT’s financial results briefing held on Wednesday morning, Lim added that the manager was “not that concerned” about the company’s gearing level as it believed that the valuation of properties was “not stretched”.

She noted how the valuation of VivoCity had grown over time.

Based on its latest results, VivoCity’s valuation as at Mar 31, 2024, stood at S$3.4 billion, up from S$3.2 billion the year before. Its per square feet lettable area stands at S$3,145 while its running yield is 5 per cent.

“Is there any room for valuation increases? I would tell you confidently, there is,” said Lim.

On whether MPACT would be open to share buybacks to show how undervalued its shares are, Lim said that if it had the capacity and the cash, it would consider buybacks for the short term.

In response to an analyst’s question on whether share buybacks may be included in the resolution for MPACT’s upcoming annual general meeting, Lim said: “Why not? It’s good to have that. No issue.”

However, she stressed that the long term strategy for the company is to “look at real estate and build the bottom line”.

MPACT to “refine” portfolio mix

Janica Tan, the manager’s chief financial officer, said that amid headwinds in the broader market and a high interest rate environment, the manager’s strategic objective is to position MPACT actively for future opportunities.

In doing so, the manager will first strengthen its capital structure and refine its portfolio mix. To this end, it is actively pursuing opportunities to recalibrate its capital structure.

Secondly, it will continue proactive asset management efforts. She noted that MPACT’s China assets had outperformed the market, and the company is focused on maintaining focus on healthy occupancy and ensuring stable rental income.

Lastly, Singapore, which comprises more than half of MPACT’s assets under management, will continue to be a key component of MPACT’s portfolio.

Units of MPACT closed Wednesday at S$1.28, up S$0.03 or 2.4 per cent.