Mapletree Pan Asia Commercial Trust

Excerpts from  Maybank report

Mapletree Pan Asia Commercial Trust (SGX: N2IU)

• Flagship commercial REIT that provides stability and scale across key gateway markets in Asia with SGD16.9b AUM.
• Foothold in 5 markets (52% in SG, 26% HK) and balanced across sub sectors (Retail 44%, Office 35%, Business Park 21%).
• One of three S-REITs sponsored by Mapletree Investments, wholly-owned by Temasek Holdings
• While it is no longer a Singapore pure play, merger with MNACT provides scale and diversification to engage in active capital recycling and accretive acquisitions

Vivo City, accretive divestment stabilise distribution

Mapletree Pan Asia Commercial Trust reported 3Q DPU of SGD2.0c, +1% QoQ/-9.1% YoY. Flagship asset, Vivo City, and relatively steady Singapore portfolio mitigated headwinds from overseas portfolio. Portfolio occupancy was stable, though vacancy is proving to be sticky. Local assets supported mid-single digit positive reversion. Debt metrics were stable. While the c.7% yield is attractive, downside persists from lower overseas occupancy and debt repricing.

Steady Singapore

Revenue and NPI for 3Q was SGD223.7m and SGD166.9m, -7.4% YoY and 8.5% YoY respectively. On a same-store basis (excluding Mapletree Anson), revenue and NPI was down an estimated 3.8% and 5.0% YoY, respectively. The decline was mainly due to weaker performance of overseas assets and FX. Portfolio occupancy was relatively stable at 90% (2Q 90.3%) with further slippage in China offset by other assets. Mgmt. has been able to backfill the Korean asset after the result announcement. However, backfilling of vacancy is taking longer than expected due to sluggish demand and/or micro market issues. Rent reversion was +4.6% (+4.1% for 1H) driven by Singapore (Vivo City +16.9%, MBC +2.0%, Other SG assets +8.3%) while overseas assets saw median negative reversion of c.10%. Festival Walk reversions likely to stabilise at current level.

Stable debt metrics

Gearing was stable at 38.2% (2Q 38.3%). Cost of debt was 3.52% (2Q 3.56%) and guide is unchanged at “mid 3%”. Coverage ratio is unchanged at 2.8x. Focus is on tenant retention. On asset value, management expects downside from Greater China and flat-to-up for Singapore and Japan.

Valuation

We value Mapletree Pan Asia Commercial Trust using a 3-stage dividend discount model using a discount rate of 7.2%. While 9MFY25 DPU is tracking 1% below our full year estimate, we leave our estimates unchanged. We lower our FY26 DPU estimate by 2.9% on the back of weaker revenue from Greater China, Japan and MBC in Singapore. We also factor in higher borrowing costs on back of our house view of gradual rate cuts. Including these changes, we lower our TP to SGD1.22 and maintain our HOLD rating. While 6.9% FY25E DPU yield is attractive, uncertainty around overseas portfolio results in our unchanged rating.

You can find the full report here and the company website here.