MAPLETREE Pan Asia Commercial Trust’s (MPACT) distribution per unit (DPU) fell 11.6 per cent to 1.98 Singapore cents for its second quarter ended Sep 30, from 2.24 cents the year before.
Revenue was down 6.1 per cent year on year to S$225.6 million, from S$240.2 million.
Net property income (NPI) fell 8.5 per cent to S$167.7 million, from S$183.2 million.
This largely reflects reduced contribution following Mapletree Anson’s divestment on Jul 31, 2024, and lower contributions from overseas assets; this was exacerbated by the strengthening Singapore dollar, MPACT’s manager said on Thursday (Oct 24).
The amount available for distribution to unitholders declined 11.9 per cent year on year to S$104 million, from S$118 million. The distribution will be paid out on Dec 6, after the record date on Nov 4.
The Reit manager noted that the accretive divestment of Mapletree Anson had bolstered MPACT’s financial performance. This, coupled with the steady performance of the Singapore assets, provided some cushion against the effects of diverse conditions in overseas markets, it noted.
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The manager also reduced borrowings amid the high-interest-rate environment, which helped offset higher interest rates and improved net finance costs for the quarter.
Meanwhile, for the half-year ended Sep 30, DPU was 7.9 per cent lower at 4.07 cents, versus 4.42 cents in the previous half-year. The amount available for distribution fell 7.8 per cent to S$214.7 million. Revenue was 3.1 per cent lower at S$462.3 million, while NPI eased 4.2 per cent to S$347.1 million for the half year.
Posing challenges
Sharon Lim, chief executive of the manager, noted that the Reit remains vigilant in addressing overseas challenges, even as its Singapore portfolio continues to demonstrate resilience. “In Greater China, near-term challenges persist, but the recent rate cut by the Fed and China’s economic stimulus measures are positive steps for overall market sentiment,” the CEO said.
However, as the economic stimulus is focused on boosting domestic consumption, there also needs to be an improvement in demand for property for the real estate sector to pick up, she added during a briefing of the Reit’s financial results on Thursday evening.
Apart from China, the Reit manager also highlighted the Makuhari submarket of Chiba, Japan, as posing challenges to the Reit’s performance.
Following an interim valuation of MPACT’s three properties in the area, the valuation fell 17.2 per cent to S$547 million as at Sep 30, 2024.
The manager said that the fair-value losses primarily stemmed from localised market softness in Makuhari.
“This market weakness has exerted pressure on occupancy levels and market rents, prompting shifts in market assumptions used by the independent valuer,” added the manager.
Additionally, there was also a change in the valuation basis for Fujitsu Makuhari Building from a single-user building to multi-tenanted one, after its single tenant, Fujitsu, decided against renewing its lease beyond 2026.
When asked if the NPI for Japan, which has dropped from S$15.8 million to S$10.3 million year on year, will remain stable going forward, Lim said during the briefing that the impact will not be seen in the short term, but possibly in the longer term of at least three years.
This is because there is still some time till the lease ends in 2026 on the Fujitsu Makuhari Building. Lim said that although she would prefer to divest the properties in Japan, it would be “a bit more trying” to do so, given its location.
Also, buyers prefer single-tenanted buildings over multi-tenanted ones like the Fujitsu Makuhari Building, she noted.
The CEO expects the Singapore portfolio – which forms the majority of MPACT’s portfolio – to remain its “anchor of stability”.
Units of MPACT fell 0.7 per cent or S$0.01 to S$1.41 on Thursday, before the results were released.
