MPACT's distributions fall again. Here’s what we learnt from its latest results

By Beansprout • 27 Oct 2023 • 0 min read

Mapletree Pan Asia Commercial Trust's (MPACT) share price has fallen further in recent weeks. We review its latest financial numbers to find out what may be driving weakness in its share price.

mapletree pan asia commercial trust mpact share price october 2023

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What happened?

Mapletree Pan Asia Commercial Trust, or MPACT, reported its fiscal 2024 second quarter (2Q FY2024) earnings recently.

Distribution per unit fell to 2.24 cents for the second quarter of fiscal year 2023/24, a 8.2% decline compared to the previous year.

Earlier, we dived into the REIT’s fundamentals to understand what might be driving the share price to reach a 1-year low.  

Mapletree Pan Asia Commercial Trust’s share price has since fallen further to reach S$1.27, before recovering slightly to close at S$1.31 as of 27 October.

As such, we thought it might be worthwhile to review its latest financial numbers and operating metrics to see if the REIT has become even more of a bargain. 

mapletree pan asia commercial trust mpact share price oct 2023
Source: Beansprout

What we learnt from Mapletree Pan Asia Commercial Trust (MPACT) results

Here are some salient aspects of MPACT’s latest earnings report that you need to know.

#1 – DPU is still declining year-on-year

For 2Q FY2024, MPACT’s gross revenue climbed 10.1% year on year to S$240.2 million, buoyed by better performance from its Singapore assets.

Net property income improved by 8.7% year on year to S$183.2 million and was negatively impacted by a 14.8% year-on-year rise in property operating expenses.

Of note, utility expenses more than doubled year on year from S$5.1 million to S$10.6 million during the quarter.

Finance costs surged by 37.5% year on year to S$57.6 million, in line with the higher interest rate environment.

As a result, distribution per unit (DPU) fell by 8.2% year on year to S$0.0224.

The manager stated that foreign exchange headwinds were responsible for the weaker performance, but DPU for 2Q FY2024 was still higher than the previous quarter’s S$0.0218.

For the first half of FY2024 (1H FY2024), DPU decreased by 10.5% year on year to S$0.0442.

Investors should note that both utility expenses and finance costs experienced huge year-on-year jumps, which explains why DPU is under pressure despite the higher gross revenue and NPI.

mapletree pan asia commercial trust mpact distributions 1h2024
Source: MPACT

#2 – The all-in cost of debt is creeping higher

Looking at MPACT’s debt metrics, one aspect stood out – the REIT’s cost of debt.

Its weighted average all-in cost of debt has been rising steadily from just 2.44% a year ago to 3.34% as of 30 September 2023.

The good news is that a larger proportion of its debt (79.9%) is now on fixed rates, up from 72.5% back in September 2022.

The 20% of loans that are on floating rates may cause MPACT’s all-in cost of debt to rise further, but the sharp rise in finance costs should stabilise once global interest rates hit their peak.

mapletree pan asia commercial trust mpact debt oct 2024
Source: MPACT


The slide above shows MPACT’s debt maturity profile.

With just 1% of its debt coming due in FY2024, investors need not worry about a huge jump in finance costs in line with rising interest rates.

FY2025 may be the year to watch out for as 21% of the REIT’s debts are due for refinancing.

MPACT still has around S$1.1 billion in available liquidity to draw down on for accretive acquisitions.

#3 – Healthy portfolio operating metrics

Despite the weaker DPU performance, MPACT boasts fairly healthy operating metrics across its portfolio.

The portfolio’s committed occupancy stood at 96.3% with a high tenant retention rate of 75.2%.

In addition, the portfolio has a well-spread-out lease expiry profile stretching from FY2024 to FY2028 and beyond across both its retail and office cum business park divisions.

MPACT’s weighted average lease expiry by gross rental income came in at 2.5 years.

#4 – Hong Kong and China properties remain a drag

The overall rental reversion across its portfolio was 3.2%, supported by strength in Singapore. 

The rental reversion rate for the Singapore properties ranged from 7.1% to 14.2% (for VivoCity).

MPACT’s South Korean property, the Pinnacle Gangnam, also registered a huge positive rental reversion of 45.5%.

However, China and Hong Kong continue to represent regions of weakness for MPACT’s portfolio.

Festival Walk in Hong Kong recorded a negative 9.5% rental reversion while the REIT’s China properties saw a 3.5% year-on-year rental rate decline.

mapletree pan asia commercial trust mpact occupancy oct 2023
Source: MPACT

#5 – Ongoing AEI for VivoCity

VivoCity is MPACT’s crown jewel as it is a large mall popular with both tourists and locals.

For 1H FY2024, VivoCity contributed 23.6% of the REIT’s revenue and 23.4% of its NPI.

The manager conducted a successful asset enhancement initiative (AEI) on the property by reconfiguring the food and beverage (F&B) cluster on level one.

The idea is to refresh the F&B offerings to keep customers coming back and to enhance the shopping experience by providing a new indoor seating area.

The mall is also seeing fresh lifestyle offerings such as cosmetics retailer Rituals and body and skin care product seller Aesop.

At the same time, VivoCity also collaborated with Sanrio and TANGS to organise events such as Garden of Lights and a Mid-Autumn Fair, respectively.

These events and refreshed offerings will go a long way towards wooing the crowds and ensuring the mall stays relevant to changing trends.

mapletree pan asia commercial trust mpact vivocity oct 2023
Source: MPACT

What would Beansprout do?

MPACT has several strengths – the presence of a strong sponsor in Mapletree Investments Pte Ltd along with its core retail asset VivoCity.

However, the REIT appears to be caught in the middle of a storm that has yet to abate. Utility and finance costs are surging, leading to a year-on-year decline in DPU.

For now, analysts remain bullish on the MPACT's prospects, with a consensus price target of S$1.65 as of 27 October 2023.

mapletree pan asia commercial trust mpact price target oct 2023

MPACT currently trades at a price-to-book ratio of 0.72x, close to its low in 2016 and below its historical average of 0.9x. 

mapletree pan asia commercial trust mpact share price oct 2023

According to consensus estimates as of 27 Oct 2023, MPACT is expected to offer a forward distribution yield of 8.4%.

This is slightly higher than the forward distribution yield of 6.2% for CapitaLand Integrated Commercial Trust and much higher than Frasers Centrepoint Trust’s forward distribution yield of 5.9%

In summary, while the dividend yield and valuation of MPACT appears attractive, we would need to have patience to see the REIT through the headwinds it is facing. 

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