Friday, July 26, 2013

Mapletree Commercial Trust 1Q14 DPU in line: Growth driven by strong reversions at VivoCity and Anson acquisition (CS)

Mapletree Commercial Trust
Maintain OUTPERFORM
Price (24 Jul 13 , S$) 1.24
TP (prev. TP S$) 1.45 (1.45)
1Q14 DPU in line: Growth driven by strong reversions at VivoCity and Anson acquisition

● 1Q14 DPU of S¢1.753 was in line, at 25% our FY14E. Driven by a full quarter contribution from Mapletree Anson and strong reversions at VivoCity and PSAB, but DPU growth was partly offset by the 10% new units issued to finance Anson acquisition.


● MCT signed 68 leases during the quarter. The 57 retail leases saw a surprisingly strong +42.8% reversion. Meanwhile, its office portfolio recorded +23.8% rent reversions. With continued strength in tenant sales and shopper traffic, we believe the reasonably strong rent reversion will likely follow through in the coming quarters.

● Portfolio occupancy was up 0.6 p.p QoQ to 98.3% led by ARC and PSAB office, although partly offset by VivoCity (however it is 99.9% pre-leased). Nearly 60% of the leases expiring in FY14 have already been re-let/renewed.

● We like MCT as a proxy to Singapore’s resilient retail sector— approximately 60% or more of MCT’s total NPI (c.70% of total asset value) are exposed to retail, mainly from VivoCity. Valuations look attractive at 5.7% FY14E yield. We maintain OUTPERFORM.

1Q14 DPU of S¢1.753 was in line, at 25% of our and street's FYE. Distributable income was up 26% YoY to S$36 mn, driven by a full quarter contribution from Mapletree Anson (acquisition completed on 4-Feb-13) and strong reversions at VivoCity and PSAB (also includes contribution from ARC), but DPU growth was partly offset by the 10% new units issued in Feb to finance Mapletree Anson acquisition.

Reversions continue to be strong at VivoCity and offices
MCT signed 68 leases during the quarter. The 57 retail leases saw a surprisingly strong +42.8% reversion, including impact from trade mix changes (hence lower retention rate of 51.6%) as well as the units subdivided and/or amalgamated. Meanwhile, MCT’s office portfolio recorded +23.8% rent reversions with a strong 91.5% retention rate. Nearly 60% of the leases expiring in FY14 have been re-let/renewed.

With continued strength in tenant sales and shopper traffic, which rose 5.6% and 1.2% to S$212.1 mn and S$13.3 mn, respectively, we believe the reasonably strong rent reversion will likely follow through in the coming quarters, although we expect the extent of the increase to eventually normalise over time.

Portfolio occupancy was up 0.6 p.p QoQ to 98.3% led by ARC, which saw occupancy increasing to 81.3% (87.6% pre-leased), and PSAB office, where occupancy rose to 99.2% (100% pre-leased), although partly offset by VivoCity which we believe to be transitional as the asset is 99.9% pre-leased.

Gearing remains broadly unchanged at 40.8% but the all-in cost of debt inched up slightly from 2.18% as at Mar-13 to 2.22% as management increased the fixed debt component to 74.5% (from 70.1% in Mar-13). MCT has no debt expiring in FY14.



Source/Extract/Excerpts/来源/转贴/摘录: Credit Suisse
Publish date: 25/07/13

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