OCBC Investment Research Private Limited

25 April 2025

Mapletree Pan Asia Commercial Trust (MPACT): Singapore Portfolio Buttresses Performance Amidst Overseas Headwinds

Investment Overview of Mapletree Pan Asia Commercial Trust (MPACT) [[1]]

• Mapletree Pan Asia Commercial Trust (MPACT) offers investors diversified exposure to retail, office, and business park sub-sectors across Asia.
• MPACT benefits from a strong parentage and management team.
• The Singapore portfolio, featuring VivoCity and Mapletree Business City (MBC), remains a key strength.
• Overseas properties, particularly in Greater China, are facing headwinds.
• While negative rental reversions at Festival Walk in Hong Kong are narrowing, structural challenges persist due to retail sales leakage to Shenzhen, China.
• The divestment of Mapletree Anson has improved the balance sheet, reducing the aggregate leverage ratio.

4QFY25 Performance Analysis [[1]]

• 4QFY25 distribution per unit (DPU) decreased by 14.8% year-on-year (YoY) to 1.95 Singapore cents, falling short of expectations.
• Portfolio committed occupancy declined slightly by 0.4 percentage points quarter-on-quarter (QoQ) to 89.6%.
• Portfolio rental reversions showed a positive trend of +3.6%, driven by strong uplifts in Singapore and South Korea.
• Aggregate leverage ratio further reduced to 37.7%.

Financial Performance Details [[1]]

• 4QFY25 results missed expectations, with gross revenue and net property income (NPI) declining by 6.8% and 7.4% YoY, respectively.
• Gross revenue reached SGD222.9m, and NPI was SGD169.5m.
• The decline was attributed to weaker contributions from overseas properties and the absence of income from the Mapletree Anson divestment.
• DPU decreased by 14.8% YoY to 1.95 Singapore cents, despite a 9.4% decrease in net finance costs to SGD51.1m due to debt repayment.
• FY25 DPU stood at 8.02 Singapore cents.

Security Information [[1]]

• Ticker: MACT.SI
• Market Cap: SGD 6.4 billion
• Daily Turnover: SGD 14.8 million
• Free Float: 43%
• Shares Outstanding: 5,268 million
• Top Shareholder: Temasek Holdings Pte. Ltd. (57.0%)

Financial Summary [[1]]

Key Financial Ratios [[1]]

Portfolio Occupancy and Rental Reversions [[2]]

• Overall portfolio committed occupancy slightly decreased by 0.4 ppt QoQ to 89.6%.
• Singapore properties showed mixed performance: VivoCity and MBC experienced slight declines, while Other SG Properties achieved a higher occupancy rate of 99.5%.
• The Pinnacle Gangnam (TPG) in South Korea saw a significant occupancy increase from 89.7% to 99.9%.
• China properties improved in occupancy by 1.8 ppt QoQ to 86.1%.
• Festival Walk and Japan properties experienced occupancy declines of 0.3 ppt and 2.8 ppt QoQ, respectively.
• Management is optimistic about improving occupancy at MBC through tenant decentralization strategies.
• Caution is advised for the shipping and trade sectors due to trade uncertainties, leading to slower decision-making and shorter lease preferences.

Rental Reversions Analysis [[2]]

• Overall FY25 portfolio rental reversions were +3.6%, with a mixed performance across different regions.
• Positive rental reversions were recorded for VivoCity (+16.8%), MBC (+2.2%), Other SG Properties (+7.4%), and TPG (+26.9%).
• Negative rental reversions were observed for Festival Walk (-6.9%), China properties (-9.3%), and Japan properties (-7.2%).
• Tenants’ sales at VivoCity and Festival Walk decreased by 2.1% and 8.4% YoY in FY25, respectively.

Financial Position and Forecast Adjustments [[2]]

• Aggregate leverage ratio decreased by 0.5 ppt QoQ to 37.7%, with 79.9% of debt hedged.
• Healthy valuation uplifts in Singapore properties offset impairments in China and Hong Kong.
• Weighted average all-in cost of debt slightly decreased to 3.51%, expected to remain around the mid-3% level.
• FY26 DPU forecast lowered by 3.4%.
• Cost of equity assumption increased from 7.2% to 7.4% due to heightened market volatility and macroeconomic uncertainties, particularly in the Greater China region.
• Fair value estimate decreased from SGD1.48 to SGD1.45.

ESG Updates [[2]]

• MPACT’s ESG rating was upgraded in December 2024, driven by improvements in corporate governance practices.
• The board remains majority independent, supported by an independent chairperson.
• MPACT exceeds industry peers in green building certifications and offers green lease agreements.
• Achieved a four-star rating with 86 points in the 2024 GRESB Real Estate Assessment.

Potential Catalysts for MPACT [[3]]

• Higher-than-expected valuation uplift.
• DPU accretive acquisitions.
• Stronger-than-expected momentum in footfall and tenants’ sales at VivoCity and Festival Walk.

Investment Risks [[3]]

• Slowdown in macroeconomic conditions dampening consumer and business sentiment.
• Acquisitions underperforming expectations.
• Non-renewal of leases by key tenants.

Valuation Analysis and Peer Comparison [[3]]

Comparison of valuation metrics with other REITs:

Company Overview (as of 31 Mar 2025) [[4]]

• MPACT is a real estate investment trust (REIT) focusing on key gateway markets in Asia.
• Listed on the Singapore Exchange Securities Limited (SGX) since April 27, 2011, initially as Mapletree Commercial Trust, renamed MPACT on August 3, 2022, after merging with Mapletree North Asia Commercial Trust.
• Investment objective: Long-term investments in diversified, income-producing real estate, primarily for office and/or retail purposes, and real estate-related assets in key Asian gateway markets.
• Portfolio: 17 commercial properties across five key gateway markets in Asia.
• Geographic distribution: Four in Singapore, one in Hong Kong, two in China, nine in Japan, and one in South Korea.
• Total net lettable area (NLA): 11.2 million square feet.
• Independently valued at SGD16.0 billion (as of March 31, 2025).

FY25 Gross Revenue Breakdown by Geography [[4]]

• Singapore: 61.8%
• Hong Kong: 21.8%
• China: 10.0%
• Japan: 6.5%
• Korea: 0.0%

FY25 Net Property Income Breakdown by Geography [[4]]

• Singapore: 61.1%
• Hong Kong: 22.0%
• China: 9.1%
• Japan: 7.8%
• Korea: 0.0%

Occupancy Trend [[4]]

• FY2019: 98.1%
• FY2020: 97.1%
• FY2021: 93.5%
• FY2022: 94.3%
• FY2023: 95.4%
• FY2024: 96.1%
• FY2025: 89.6%

Distribution Per Unit (S cents) [[4]]

• FY2019: 9.14
• FY2020: 8.00
• FY2021: 9.49
• FY2022: 9.53
• FY2023: 9.61
• FY2024: 8.91
• FY2025: 8.02

Company Financials – Income Statement (In Millions of SGD) [[5]]

Profitability Ratios [[5]]

Credit Ratios [[5]]