Company Reports

Mapletree Pan Asia Commercial Trust was established following the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust in July 2022. The combined trust invests in a diversified portfolio of income-producing properties used for office and retail activities in Asia.

Mapletree Pan Asia Commercial Trust’s first-quarter fiscal 2025 (ending March) results were below our expectations. Distribution per unit fell 4.1% year on year, mainly due to lower contributions from its China and Japan portfolios suffering from market and currency headwinds. We updated our currency and leasing assumptions for its China, Japan, and Hong Kong assets to account for the weak results. Consequently, we cut our fair value estimate to SGD 1.68 per unit from SGD 1.74, while we lowered our fiscal 2025-27 DPU estimates by 4.1%-5.1%. Based on the last closing price, the trust trades at an attractive fiscal 2025 dividend yield of 6.8%. Although we think the units are undervalued, the unfavorable demand and supply market dynamics for its China, Japan, and Hong Kong portfolio will likely weigh on its unit price performance in the near term.

Mapletree Pan Asia Commercial Trust was established following the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust in July 2022. The combined trust invests in a diversified portfolio of income-producing properties used for office and retail activities in Asia.

We retain Mapletree Pan Asia Commercial Trust’s fair value estimate of SGD 1.74 per share after the proposed divestment of Mapletree Anson office tower for SGD 775 million. The proceeds will be used to pay off debt and the trust expects the aggregate leverage ratio and interest coverage ratio to improve to 37.6% and 3.3 times respectively, from 40.5% and 2.9 times as at March 31. Given that the divestment yield of 3.8% is lower than the cost of debt that is being paid off, management anticipates the divestment to result in a 1.5% accretion to its distribution per share. After updating our model for this divestment, our DPU forecasts for fiscal 2025-27 (ending March) were raised by 0.9%-1.2%. The trust is trading at an attractive fiscal 2025 distribution yield of 7.5%, based on its last closing price. While we think the shares are undervalued currently, we believe the negative outlook for its Hong Kong and China assets will continue to weigh on near-term share price performance.

Mapletree Pan Asia Commercial Trust’s, or MPACT’s, fourth-quarter fiscal 2024 (ending March) net property income was in line with our expectation. However, distribution per unit, or DPU, came in slightly above our expectation due to lower-than-expected borrowing cost. We lift our fiscal 2025, 2026, and 2027 DPU estimates by 2.1%, 2.6%, and 3.2%, respectively, to factor in lower borrowing cost, although this is partly offset by a stronger Singapore dollar assumption against the Japanese yen and Chinese yuan. We keep our fair value estimate of SGD 1.74 per unit as our long-term thesis remains intact. Based on current price, the trust trades at an attractive 2024 distribution yield of 7.1%. We think the trust’s assets, aside from VivoCity, continue to face near-term headwinds from the stronger Singapore dollar and unfavorable demand and supply market dynamics. However, we think these have been priced in, and the units are currently undervalued.

Mapletree Pan Asia Commercial Trust was established following the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust in July 2022. The combined trust invests in a diversified portfolio of income-producing properties used for office and retail activities in Asia.

No-moat Mapletree Pan Asia Commercial Trust’s, or MPACT’s, third-quarter fiscal 2024 (year ends in March) results were in line with our expectations. Net property income rose 1.7% year on year, driven by better performance from its Singapore properties, partly offset by currency headwinds due to the strong Singapore dollar. Distribution per unit fell 9.1% year on year due to higher interest costs and the absence of the one-off gain from the cross-currency interest-rate swap. With no major surprises, we leave our assumptions unchanged and retain our fair value estimate of SGD 1.74. We believe concerns over the trust’s China portfolio, and the upcoming office supply in the Labrador submarket adding competition to the trust’s Mapletree Business City and mTower, have been priced in by the market. Accordingly, we think the trust is currently undervalued and investors should start accumulating MPACT.

We lowered our fair value estimate of Mapletree Pan Asia Commercial Trust, or MPACT, to SGD 1.74 from SGD 1.82 after second-quarter fiscal 2024 (ending March) results came in slightly below our expectations. The miss is due to currency headwinds and lower-than-expected contribution from Festival Walk. We trimmed our rental growth assumption on Festival Walk and its China office portfolio, given the slower-than-expected retail recovery in Hong Kong and the weaker office market outlook in China. As a result, our distribution per unit forecasts for fiscal 2024, 2025, and 2026 are reduced by 1.5%, 3.6%, and 4.6%, respectively. Based on the last closing price of SGD 1.30, we think the units are undervalued and trade at an attractive fiscal 2024 dividend yield of 6.7%.

Mapletree Pan Asia Commercial Trust was established following the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust in July 2022. The combined trust invests in a diversified portfolio of income-producing properties used for office and retail activities in Asia.

Sabana REIT’s unitholders have voted to remove ESR Group as its manager and internalize the REIT management function. This move is unprecedented in Singapore, but we think it has positive implications for the industry. This event occurred because activist investor Quarz Capital led the push. As ESR Group holds around 21% of Sabana REIT compared with Quarz Capital’s 14%, ESR Group only held a slight advantage going into the vote. Ultimately, we think ESR Group lost the vote because of concerns about potential conflicts of interest—ESR Group is the sponsor of more than one industrial REIT in Singapore—and the perception that Sabana REIT has underperformed its peers due to poor management by ESR Group.

Mapletree Pan Asia Commercial Trust’s first-quarter fiscal 2024 (ending March) net property income grew 1% quarter on quarter to SGD 179.2 million on the back of 1.6% quarter-on-quarter revenue growth. These are largely driven by higher contributions from Mapletree Business City and VivoCity, offset by increased utility costs. However, distribution per unit fell 3.1% quarter on quarter to SGD 0.0218 due to higher borrowing costs. The results are largely in line with our expectations and we retain our fair value estimate of SGD 1.82. We think the trust is fairly valued at current prices, trading at a fiscal 2024 dividend yield of 5.3%. Within the sector, we prefer Keppel REIT, which is trading at a more attractive 2023 dividend yield of 6.6%, underpinned by its high-quality grade-A office assets and exceptional tenants register.

Mapletree Pan Asia Commercial Trust’s fiscal 2023 (ended March) net property income rose 62.6% year on year to SGD 632 million, on the back of the merger with Mapletree North Asia Commercial Trust and a higher contribution from its Singapore properties. The trust’s flagship asset, VivoCity, achieved a record SGD 1.05 billion of tenant sales, which exceeded prepandemic levels. The relaxation of COVID-19 measures in Hong Kong as well as the reopening of the China border also drove the recovery of Festival Walk, which saw year-on-year shopper traffic and retail sales growing 276% and 77%, respectively, in March. As the performance was in line with our expectations, we retain our SGD 1.82 fair value estimate. We continue to expect MPACT's retail assets to benefit from the reopening of China, which drives travel recovery, but we think the trust is fairly valued at current prices with the positive outlook largely priced in.

Mapletree Pan Asia Commercial Trust was established following the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust in July 2022. The combined trust invests in a diversified portfolio of income-producing properties used for office and retail activities in Asia.

Mapletree Pan Asia Commercial Trust’s, or MPACT’s, merger with Mapletree North Asia Commercial Trust continues to drive its near-term performance, pushing third-quarter fiscal 2023 (ending March) property income 76.8% higher year on year to SGD 179 million, in line with our expectations. With China and Hong Kong joining the rest of the world to substantially ease travel restrictions, we expect the trust’s retail assets in Hong Kong and office properties in China to benefit from the recovering travel and business outlook and to register improving leasing and rental performances. Having said that, we think the positive outlook has been largely priced in and the trust is fairly valued at current prices.

Mapletree Pan Asia Commercial Trust, or MPACT, delivered a solid first-half fiscal 2023 (ending March) performance with gross revenue and net property income rising 44.9% year on year on the back of its successful merger with Mapletree North Asia Commercial Trust, or MNACT. Putting the merger aside, we were most impressed with the performance of VivoCity which managed to grow its shopper traffic and tenant sales by 49.4% and 48.4% year on year, respectively. With first-half fiscal 2023’s tenant sales already surpassing its pre-COVID-19 levels, we are not surprised to see VivoCity achieving a positive 7.7% rental reversion (for first-half fiscal 2023) that was ahead of another mega-mall peer, Suntec City Mall. Given VivoCity’s positioning as a key gateway to a popular tourist destination, Sentosa Island, we expect the mall to continue to ride on the international travel recovery to improve its shopper traffic and tenant sales that would attract strong leasing demand for its retail spaces. As MPACT’s performance was largely in line with our expectations, we maintain our fair value estimate of SGD 1.82. While we like the REIT for its high-quality portfolio of retail assets and business park, we think the units are fairly valued at the current price and encourage investors to wait for a better entry point.

Mapletree Pan Asia Commercial Trust, or MPACT, was established following the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust that was effective from July 2022. The combined trust invests in a diversified portfolio of income-producing properties used for the purpose of office and retail activities in Asia.

We are initiating coverage of Mapletree Pan Asia Commercial Trust, or MPACT, with a fair value estimate of SGD 1.82, and no-moat and stable moat trend ratings. Our fair value estimate implies a forward distribution yield of 5.3% in fiscal 2023 (ending March) and price/book value of 0.9 times. We think the trust is fairly valued at current prices with near-term growth driven by the merger with Mapletree North Asia Commercial Trust, or MNACT, priced in.

Mapletree Pan Asia Commercial Trust, or MPACT, was established following the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust that was effective from July 2022. The combined trust invests in a diversified portfolio of income-producing properties used for the purpose of office and retail activities in Asia.