Mapletree Pan Asia Comm Trust (MPACT SP): Finding a Floor – BUY Rating Maintained 1

Maybank Research Pte Ltd April 30, 2025
Mapletree Pan Asia Commercial Trust (MPACT): Finding a Floor Amid Falling Distributions, Valuation Supports BUY Rating
Mapletree Pan Asia Commercial Trust (MPACT SP) faces persistent headwinds, but its reasonable valuation and proactive asset management offer potential for investors, leading Maybank Research to maintain a BUY rating with a revised price target.

Quarterly Performance Highlights: DPU Declines on Asset Sale and Overseas Weakness

MPACT reported a 4th Quarter Distribution Per Unit (DPU) of SGD 1.95 cents, representing a 14.8% decrease year-over-year (YoY). For the full fiscal year (FY), the DPU came in at SGD 8.02 cents, down 10% YoY.
Key drivers for this decline include:
The absence of income contribution from the divested Mapletree Anson asset.
Weaker performance from overseas properties.
These negative factors were partially offset by lower borrowing expenses resulting from proactive debt management.
On the top line, 4Q revenue was SGD 222.9 million (-6.8% YoY), and Net Property Income (NPI) was SGD 169.5 million (-7.4% YoY). The full-year figures showed revenue of SGD 908.8 million (-5.1% YoY) and NPI of SGD 683.5 million (-6.1% YoY), primarily due to the Mapletree Anson divestment and lower overseas contributions.
However, on a same-store basis (excluding Mapletree Anson), Singapore’s NPI actually rose 1.4% YoY for 4Q, driven significantly by the performance of VivoCity.
4Q/FY25 Results Summary

Portfolio Health Check: Mixed Metrics

MPACT’s portfolio metrics presented a mixed picture:
Occupancy: Overall portfolio occupancy declined to 89.6% from 96.1% a year ago, reflecting ongoing pressure on overseas assets and some frictional vacancies in local properties.
Rental Reversions: Positive rental reversions continued, registering at +3.6% for the year-to-date (YTD), primarily driven by Singapore assets. VivoCity achieved a strong +16.8% reversion, while Mapletree Business City (MBC) saw +2.2%. Festival Walk in Hong Kong experienced negative reversions at -6.9%.
Tenant Sales: Tenant sales showed weakness, declining 2.1% YoY at VivoCity and 8.4% YoY at Festival Walk YTD.
Valuation: Portfolio valuation remained stable on a same-store basis, increasing by 2.2%. Higher valuations for Singapore assets, particularly VivoCity and MBC where cap rates compressed, offset declines in overseas properties. Net Asset Value (NAV) per unit rose 1.7% YoY to SGD 1.78.
Key Portfolio Metrics

Proactive Debt Management Cushions Impact

MPACT demonstrated proactive debt management:
Gearing: Aggregate leverage decreased slightly to 37.7% from 38.2% in the previous quarter and 40.5% a year ago.
Borrowing Costs: The all-in financing cost edged down marginally to 3.51% from 3.52% in 3QFY25, although it remains higher than the 3.35% in 4QFY24. The repayment of more expensive debt using proceeds from the Mapletree Anson divestment helped cushion the drop in top-line revenue.
Debt Issuance: In March, MPACT issued a 7-year fixed-rate senior green note of SGD 200 million at an attractive rate of 3.104%.
Coverage Ratio: The Interest Coverage Ratio (ICR) remained stable at 2.8x.
Guidance: The guidance for debt cost remains unchanged at “mid 3.0%”.

Estimate Changes and Valuation

Maybank Research has adjusted its forecasts for MPACT:
FY26 DPU estimate raised by 1.4% to 7.97 SGD cents, factoring in lower management fees post-divestment, offset by higher borrowing costs.
FY27 DPU estimate lowered by 4.9% to 8.36 SGD cents, mainly due to weaker top-line assumptions and higher borrowing costs than previously anticipated.
Introduced FY28 DPU estimate of 8.55 SGD cents.
Forecast Summary (FYE Mar)

Based on a 3-stage dividend discount model using a discount rate of 7% and incorporating these estimate changes, the 12-month price target (TP) is raised to SGD 1.30 from SGD 1.20.

Investment Thesis: BUY Maintained

Despite persisting risks, the BUY rating is maintained. The rationale includes:
Reasonable Valuation: Trading at 0.7x Price-to-Book Value (P/BV).
Attractive Yield: Offering a forward yield of approximately 6.5% (FY26E).
Proactive Management: Demonstrated ability in asset and capital management cushions downside risks.
VivoCity Anchor: Strong performance from its flagship Singapore mall provides stability.
The current share price of SGD 1.22 offers an implied upside of approximately 11% to the new target price of SGD 1.30.

Key Risks to Monitor

Investors should be aware of potential risks:
Non-renewal of anchor leases, particularly in China, Japan, and MBC, Singapore.
Weaker-than-expected rental reversions, especially in Hong Kong.
Slower retail sales growth in Singapore.
Higher-than-anticipated interest costs impacting earnings and valuations.
The impact of hybrid working trends on business park assets, given the relatively high concentration of tech tenants (14.4% of GRI, led by Google).

MPACT’s Value Proposition and Strategic Focus

Scale and Diversification: A flagship commercial REIT with SGD 16.9 billion Assets Under Management (AUM) across five key Asian gateway markets (Singapore 52%, Hong Kong 26%, China, Japan, South Korea). Balanced portfolio across Retail (44%), Office (35%), and Business Park (21%).
Strong Sponsorship: Sponsored by Mapletree Investments, wholly-owned by Temasek Holdings, providing access to pipeline assets and capital markets.
Capital Recycling: Merger with MNACT provided scale for active capital recycling and accretive acquisitions.
Alignment: Management fee structure is aligned with DPU growth.

ESG Considerations

MPACT demonstrates a focus on Environmental, Social, and Governance (ESG) factors:
Environmental: Targets maintaining BCA Green Mark certifications. VivoCity and MBC hold the highest Platinum rating. Energy-saving initiatives like fan coil and chiller upgrades are implemented. Secured green loans and established a green financing framework. Aims to improve energy/water intensity.
Social: Conducts tenant workshops at VivoCity to enhance service culture. Uses malls as platforms for social causes (e.g., Hair for Hope). Added a public library at VivoCity, gaining bonus GFA. Strong gender diversity (54% female employees, 72% female management team including CEO in FY21).
Governance: Externally managed by a Mapletree subsidiary. High board independence (7 out of 12 members). Management fee structure comparable to peers. Consistently high payout ratio (100% typically, though 60% retained in 4Q20 due to COVID-19 impact). Proven value creation through AEIs (e.g., VivoCity) and accretive acquisitions (MBC Phases 1 & 2). Maintains a strong balance sheet.
Overall, while MPACT navigates challenges from market conditions and portfolio adjustments, its core strengths, proactive management, and current valuation present a compelling investment case according to Maybank Research.