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Business Times
06-05-2025
- Business
- Business Times
MPACT should sell Festival Walk or merge to get more Singapore-centric
SINGAPORE'S largest mall, VivoCity, with over a million square feet of lettable area, is much loved by shoppers. However, the mall's owner – Mapletree Pan Asia Commercial Trust (MPACT) – receives little affection from investors. In terms of trading price relative to book value, MPACT is performing the worst among the seven real estate investment trusts (Reits) that are members of the benchmark Straits Times Index (STI). As at May 6, MPACT, which owns properties owned primarily for office and/or retail purposes, traded at a 32 per cent discount to its end-March 2025 net asset value (NAV) per unit of S$1.78. In contrast, peers on the STI which own mainly office and/or retail properties – CapitaLand Integrated Commercial Trust (CICT) and Frasers Centrepoint Trust (FCT) – trade at around their latest reported NAV per unit. Both have much more Singapore-centric property portfolios than MPACT does. Perhaps, unitholders of Singapore-focused Mapletree Commercial Trust are ruing the aforesaid merging with Mapletree North Asia Commercial Trust, which owned properties in Hong Kong, China, Japan and South Korea, to form MPACT in 2022. Is MPACT's poor market valuation largely due to its ownership of Festival Walk in Hong Kong's Kowloon Tong? Maybe, the trust should aim to get better valuation from investors by turning much more Singapore-centric. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Festival Walk was valued at HK$23.8 billion, or around S$4.1 billion at end-March. The shopping and entertainment strip and VivoCity accounted for about 25.6 per cent and 24.2 per cent of MPACT's end-March property portfolio valuation, respectively. At end-Mar, VivoCity's valuation was up 14.8 per cent, but Festival Walk's fell 5.2 per cent in local currency terms from its level the year before. VivoCity, located in Singapore's HarbourFront area, is way more productive than Festival Walk – the former's net property income (NPI) for the financial year ended Mar 31 (FY2025) of S$176.6 million was 18.7 per cent higher than the latter's NPI of S$148.8 million. Amid a challenging environment for Hong Kong's retail landlords, tenant sales at Festival Walk fell 8.4 per cent year on year in FY2025. Rental reversion at Festival Walk was down 6.9 per cent, while VivoCity's climbed 16.8 per cent. Selling Festival Walk By selling Festival Walk, MPACT becomes much more Singapore-centric, which might help its unit price re-rate upwards. At end-March, Singapore assets accounted for 56.5 per cent of MPACT's property portfolio valuation of nearly S$16 billion, with the properties in Hong Kong, China, Japan and South Korea contributing the remainder. Excluding Festival Walk, the Singapore assets contribute about 75.9 per cent to the trust's end-March property valuation. Besides VivoCity, MPACT's other assets here are Mapletree Business City and mTower in the Alexandra area, and Bank of America HarbourFront in the HarbourFront area. However, can Festival Walk transact at or above its latest valuation? If needed, MPACT's sponsor Temasek-owned Mapletree Investments could buy Festival Walk at valuation. While acquiring Festival Walk may not be at the top of its agenda, Mapletree can show it is a strong sponsor who adds value to MPACT's unitholders by taking Festival Walk off the trust's hands. Showing that it is a strong sponsor will enhance Mapletree's credibility in property fund management. The Temasek-owned group is active in managing Singapore-listed Reits and private equity real estate funds that own assets across diverse geographies and property asset types. Moreover, as Mapletree is a major unitholder of MPACT, it gains from any improvement in the trust's trading price. Divesting Festival Walk not only makes MPACT more Singapore-centric, but also raises cash to potentially make additional acquisitions in Singapore. MPACT could possibly buy The Woodleigh Mall, in which Cuscaden Peak has ownership interest. Mapletree jointly owns Cuscaden Peak, alongside Temasek's CLA Real Estate. Over time, MPACT might eye buying Paragon along Orchard Road, after a potential major asset enhancement initiative. Cuscaden Peak will fully own Paragon after privatising Paragon Reit . Pursuing a merger Alternatively, MPACT could add scale and Singapore-centricity by merging with another trust. An MPACT- Suntec Reit merger can make sense. Suntec Reit owns properties that are used mainly for office and/or retail purposes in Singapore, Australia and UK, with a total valuation of S$11.8 billion at end-2024. The Singapore assets contributed about 78 per cent of the said valuation. As Suntec Reit trades at a larger discount to NAV than MPACT, Suntec Reit's unitholders may be happy to exchange units in it for units in a merged MPACT-Suntec Reit. Another possibility is for MPACT to merge with CICT, which owns about S$26 billion of properties as at end-2024 and has Singapore assets accounting for nearly 95 per cent of property valuation. A potential CICT-MPACT merger would enable MPACT's unitholders to hold units in a larger entity that is more Singapore-centric and likely to trade at a far superior multiple to book value than MPACT. Can Mapletree, which owns MPACT's manager, stomach possibly losing lucrative recurrent fund management income as part of this merger? Reits have been a major success story on the local bourse. For them to continue to win the confidence of investors, sponsors and managers, they need to pro-actively create unitholder value. MPACT has scale and a crown jewel in VivoCity. The mall's performance might improve further when ongoing major asset enhancements works are completed, possibly by end-2025. However, managing VivoCity well is not enough. MPACT's manager must urgently address the trust's poor equities market valuation. MPACT's manager should consider selling Festival Walk and/or a merger to help improve MPACT's unit price, thereby benefiting all unitholders. The writer owns units in MPACT
Yahoo
27-04-2025
- Business
- Yahoo
MPACT's FY2024/2025 DPU declines by 10% y-o-y amidst overseas challenges
MPACT's FY2025 DPU declines by 10% y-o-y due to absence of Mapletree Anson and lower overseas contributions Mapletree Pan Asia Commercial Trust's FY2024/2025 distributions per unit (DPU) for the 12 months to March 31 declined by 10% y-o-y to 8.02 cents while 4Q2024/2025 DPU declined by 14.8% y-o-y to 1.95 cents. For 4QFY2024/2025, gross revenue and net property income (NPI) were $222.9 million and $169.5 million, lower by 6.8% and 7.4% y-o-y respectively. This largely reflects the absence of Mapletree Anson's contribution following its divestment on July 31, 2024 and lower overseas contributions. For the full year ended March 31, 2025, MPACT reported gross revenue and NPI of $908.8 million and $683.5 million, lower by 5.1% and 6.1% y-o-y respectively. The deployment of Mapletree Anson's divestment proceeds to reduce debt lowered full-year net finance costs by 3.1% y-o-y despite elevated interest rates, while improving the aggregate leverage ratio from 40.5% from a year ago to 37.7% as at March 31. By systematically swapping HK$ loans into CNH over the past two years, the manager has substantially reduced the higher-cost HK$ component of MPACT's debt from 30% to 23% in FY2024, and further to 18% as at March 31. Correspondingly, the more favourably priced CNH component was raised from 0.3% to 7%, and now to 10%, creating better alignment with the AUM composition and matching of currency cashflows while capturing interest rate advantage. To shield against interest rate and foreign exchange volatilities, 79.9% of the total gross debt of $6.1 billion was either fixed-rate debts or hedged through interest rate swaps, while approximately 90% of MPACT's distributable income (based on rolling four quarters) was either generated in or hedged into Singapore dollar as at March 31 2025. MPACT has approximately $1.2 billion of cash and undrawn committed facilities. 98 cents, down 11.6% y-o-y Better macro and interest environment to encourage allocations into S-REITs in 2HFY2024, DBS names top picks Read more stories about where the money flows, and analysis of the biggest market stories from Singapore and around the World Get in-depth insights from our expert contributors, and dive into financial and economic trends Follow the market issue situation with our daily updates Or want more Lifestyle and Passion stories? Click here
Business Times
25-04-2025
- Business
- Business Times
MPACT posts 14.8% lower Q4 DPU of S$0.0195
[SINGAPORE] Mapletree Pan Asia Commercial Trust's (MPACT) distribution per unit (DPU) for the fourth quarter ended March slid 14.8 per cent year on year to S$0.0195 from S$0.0229 previously. Unitholders can expect to receive the distribution payout on Jun 6. Distributable income stood at S$103.6 million for Q4, falling 14 per cent from S$120.5 million. The real estate investment trust's (Reit) revenue fell 6.8 per cent to S$222.9 million from S$239.2 million in the year-ago period, while net property income (NPI) for the quarter dropped 7.4 per cent to S$169.5 million from S$183.1 million. The manager of MPACT on Friday (Apr 25) attributed the lower revenue to reduced contribution from Singapore properties due to the divestment of Mapletree Anson on Jul 31, 2024, and lower overseas contributions. In a Q4 business update, Sharon Lim, chief executive officer of the Reit manager, noted that VivoCity spearheaded some stability, recording 3.5 per cent and 2.1 per cent year-on-year growth in the full-year revenue and NPI, respectively. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up The Reit's DPU for the full year stood at S$0.0802, down 10 per cent from S$0.0891 in the same period a year prior. Overall portfolio tenant retention rate was 89.6 per cent, with a weighted average lease expiry of 2.2 years as at Mar 31. 'We are intensifying efforts to safeguard occupancy and cash flow while exploring suitable opportunities to optimise the portfolio,' said Lim. The average term to maturity of debt was extended to 3.3 years as at Mar 31, from 3.1 years. Units of MPACT closed 1.6 per cent or S$0.02 lower on Thursday at S$1.22.
