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MapleTree Commercial Trust : Poised For Sustained Performance
The best performing malls in Singapore havethree
things in common.
Superb location, high human traffic, and good tenants. MapleTree Commercial Trust’s (MCT) Vivo City checked all three on the list by a clear mile.
Located near Sentosa, which houses the magnificent Integrated Resorts, and is a hotspot for tourists and locals, Vivo City is the bejewelled retail mall of MCT.
Vivo City’s convenient location (directly above harbourfront mrt station and close to Sentosa), and its good mix of tenants see human traffic flooding the mall constantly in a good way.
The tenant mix sees a heavy weightage of F&B, Fashion, and Hypermart/Departmental tenants (Key Tenants: VivoMart, Golden Village, Tangs, Best Denki).
This makes it a mall that not only attracts tourists (location wise), and also families, because of its tenant mix.
Typical weekend at Vivo City mall
Other Assets Under Portfolio
Apart from Vivo City, assets under MCT’s management includes, Merill Lynch Harborfront (MLHF), PSA Building (PSAB), and Mapletree Anson (Anson).
The following table shows the committed level of occupancy as at end FY13/14 secured in its assets, which shows an above 90 percent commitment level for all four assets.
The lease of its MLHF building to Merill Lynch Global Services is on a long term secured lease basis, which will continue to enjoy 100 percent commitment without any specific expiration risks.
The performance of its assets have helped bolster growth and have seen revenue growth for seven consecutive quarters since MCT’s listing in 2011.
Good performing assets under its portfolio Consistent distribution of profits to its shareholders 7 consistent quarters of revenue growth ( see chart below ) Backed by Temasek Holdings Good key tenant mix in its properties Potential upward rental reversions for its retail mall assets PSAB to fully experience human traffic growth from developments around its vicinity (e.g. BTO flats near Labrador and Telok Blangah area) Decent yield of 5.215 percent (*as of price at $1.23)
Source: Factset Research Systems
Relatively high net debt to equity of 0.70x, high gearing ratio of 40.8 percent 44.8 percent expiration of leases in Mapltree Anson for FY14 Recessions or financial instability in the economy can severely affect Key Tenants in Mapletree Anson who are in the Insurance and Banking Services industries Higher interest rates could hurt refinancing options, resulting in higher interest expense outlays
SI Research Takeaway
Personally, I expect Vivo City to continue being the outperformer in its portfolio.
However, it would be unfair not to take into considerations of what I would refer to as an asset that’s poised for growth, which is none other than PSAB.
A key catalyst not talked very much on is the area surrounding PSAB. MCT did a very smart move in positioning both Vivo City and PSAB.
Both properties are smacked along the region of harborfront to Labrador park, and regardless of whether or not traffic flow is lost to Vivo City from PSAB, the ultimate beneficiary will still be one of its properties, a win win.
However, scoping around revealed that PSAB has a good 11.7 percent mix of F&B tenants in the property, and this see patrons from both heart landers around the area and the office crowd (eg PSAB, NOL Building).
Currently, human traffic from the heartland crowd near Telok Blangah, Pasir Panjang, and Depot road are direct patrons of close proximity to PSAB.
BTOs like Telok Blangah Parc View (estimated completion: 4Q17), and Telok Blangah Ridgeview (estimated completion 1Q16) will both add additional potential human traffic to PSAB, as it is within close proximity.
PSAB is an asset in a growth stage within MCT’s portfolio, and it will be watched and is expected to perform well.
Although risks are apparent, especially for Anson, on the grand scheme of things, MCT still deserves a spot on my shopping cart when the price is more favourable.
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