Mapletree Pan Asia Commercial Trust (MPACT): 2Q & 1H FY25/26 Financial Analysis

Mapletree Pan Asia Commercial Trust (MPACT) released its financial results for the second quarter and first half of FY25/26. The report highlights continued portfolio resilience anchored by its Singapore assets, amidst headwinds in overseas markets. Below is a structured analysis of the key financial and operational metrics, portfolio developments, and outlook for investors.

Key Financial Metrics & Performance

Historical Performance Trends

MPACT’s Singapore assets continue to underpin portfolio strength, with VivoCity delivering 7.7% NPI growth for the quarter and 6.9% for the half-year, despite disruption from asset enhancement works. The overall portfolio saw a YoY drop in revenue and NPI, primarily due to the divestment of Mapletree Anson and two Japan properties, as well as currency headwinds from a stronger SGD. However, lower finance costs, prudent expense management, and strategic asset sales helped cushion the impact.

The portfolio committed occupancy stood at 88.9%, with Singapore assets showing near-full occupancy (VivoCity at 100%). Overseas assets saw more volatility, notably in Japan and China, due to market softness and divestments.

Divestments and Portfolio Optimisation

In August 2025, MPACT completed the divestment of two Japan office buildings (TS Ikebukuro and ABAS Shin-Yokohama) as part of an ongoing portfolio reconstitution to uplift asset quality and refocus on core markets. The proceeds were used to reduce debt, resulting in a lower cost of funding and improved balance sheet resilience.

Exceptional Earnings and Expenses

• Lower operating expenses, especially in Singapore, driven by reduced utility rates and divestment effects.
• Savings in finance costs due to both lower interest rates and reduced borrowings post-divestments.
• One-off compensation income at Mapletree Business City contributed to the quarter’s results.

Asset Revaluations

An independent valuation was conducted for The Pinnacle Gangnam as at 30 September 2025 to meet financing requirements. Other property valuations remain unchanged from 31 March 2025.

Distribution and Dividend Comparison

The DPU for 2Q FY25/26 was 2.01 Singapore cents, up 1.5% YoY. For 1H FY25/26, DPU was 4.02 cents, down 1.2% YoY due to overseas headwinds offsetting Singapore’s gains and expense savings.

Macroeconomic and Market Environment

• Singapore’s economy remains robust, supporting stable rental growth and retail sales. Retail recovery is aided by government stimulus and tourism, though a strong SGD and cautious hiring could dampen domestic spend.
• Hong Kong retail saw modest growth, but outbound travel continued to affect sales. New supply in Kowloon East is expected to pressure rents in the near term.
• China and Japan office/business park assets face ongoing market softness, supply imbalance, and rental pressure.

Corporate Actions and Capital Management

• Aggregate leverage was kept below 40%, with a comfortable interest coverage ratio of 3.0x.
• MPACT issued S\$200 million in seven-year senior green notes at a fixed rate of 2.45% p.a. in August 2025, locking in favorable long-term rates.
• Approximately 78% of total debt is hedged or fixed, and 93% of distributable income is derived from or hedged into SGD, providing stability.

Chairman’s Statement

“Operationally, the Manager remains focused on protecting cash flow by prioritising tenant retention and preserving occupancy, particularly in markets facing stronger headwinds. Prudent cost management and selective asset enhancements will continue to support performance. The Manager stays committed to MPACT’s long-term objectives and maintains a proactive approach to pursuing portfolio optimisation opportunities. We will continue to refine the portfolio, reinforcing Singapore as our cornerstone while managing our capital judiciously.”

Tone: The statement reflects a prudent and proactive tone, emphasizing stability, operational discipline, and long-term value creation despite near-term market challenges.

Forecasted Events and Risks

• Global uncertainties, including geopolitical tensions and trade disputes, are expected to persist, dampening business sentiment and overseas market recovery.
• Asset enhancement initiatives (e.g., VivoCity Basement 2) are completed and expected to deliver improved returns and shopper engagement.
• New supply in Hong Kong and China may pressure rents, while Singapore assets are likely to remain resilient.

Conclusion & Investment Recommendations

Overall Financial Position: MPACT’s financial performance remains resilient, anchored by its Singapore assets. The decline in revenue and NPI was mitigated by cost savings, lower finance expenses, and prudent capital management. The outlook is cautiously positive for core Singapore assets, but overseas markets face ongoing headwinds.

For Current Holders: Investors holding MPACT should consider maintaining their position, given the trust’s stable Singapore anchor, proactive debt and cost management, and steady distribution. While overseas assets present risks, the portfolio is being actively rebalanced toward quality and stability.

For Prospective Investors: Those not currently holding MPACT may consider entering on weakness, particularly if seeking exposure to Singapore’s commercial property sector. However, caution is warranted due to overseas market uncertainties and currency risks. A staggered investment approach may be prudent until overseas headwinds abate.

Disclaimer: This analysis is based solely on information disclosed in the company’s financial report and does not constitute financial advice. Investors should consider their individual circumstances and consult professional advisors before making investment decisions.

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