Mapletree Pan Asia Commercial Trust Delivers Resilient Performance Amid Overseas Headwinds, Eyes Portfolio Optimisation

Key Highlights from MPACT’s 2Q and 1H FY25/26 Results

• Robust Singapore Performance Offsets Overseas Weakness
  • Gross revenue for 2Q FY25/26 declined 3.2% YoY to S\$218.5 million, mainly due to weaker overseas contributions and currency headwinds, but Singapore assets posted a 3.5% rise in revenue (excluding divested Mapletree Anson).
  • Net property income (NPI) fell 2.2% YoY to S\$163.9 million, though NPI from Singapore rose 6.1% on a comparable basis, led by VivoCity’s 7.7% NPI growth and higher one-off compensation income at Mapletree Business City.
  • Distribution per unit (DPU) increased 1.5% YoY to 2.01 Singapore cents for 2Q, driven by cost savings and lower finance expenses.
• Strategic Divestments and Portfolio Optimisation Drive Financial Strength
  • Completed divestment of two Japan office buildings (TS Ikebukuro and ABAS Shin-Yokohama) in August 2025, redirecting proceeds to debt reduction and sharpening focus on core markets.
  • Finance expenses dropped 16.4% YoY due to lower interest rates and reduced borrowings post-divestment.
  • Aggregate leverage ratio improved to 37.6%, with interest coverage at a comfortable 3.0x and average term to maturity extended to 3.5 years.
  • Issued S\$200 million seven-year 2.45% fixed rate green notes to lock in favourable long-term rates.
• Proactive Lease and Asset Management Underpin Stability
  • Committed occupancy across the portfolio at 88.9%, with VivoCity and Singapore business parks nearly fully occupied.
  • VivoCity achieved a 14.1% rental uplift, offsetting negative rental reversions in overseas assets (Festival Walk, HK: -10.1%; China properties: -21.6%).
  • Well-staggered lease expiry profile and strong tenant retention rates, particularly in Singapore, mitigate concentration risk.
  • Basement 2 Asset Enhancement Initiative (AEI) at VivoCity completed, expanding F&B offerings and increasing retail lettable area, delivering >10% ROI on S\$43 million capex.
  • Festival Walk in Hong Kong held steady with proactive tenant mix refreshes and high-impact marketing events to drive footfall.
• Sustainability Commitment and ESG Leadership
  • Maintained 100% green-certified portfolio, with a target to sign 33% of lettable area under green leases by FY25/26.
  • Progress on Net Zero by 2050 roadmap, including increased solar capacity and rigorous decarbonisation initiatives.
  • Continued strong performance in external ESG ratings (GRESB Four-Star).

Shareholder-Relevant Insights & Potential Price Movers

• Singapore Assets Now Constitute 57% of Portfolio AUM and 61% of NPI Post-Divestment
  • This shift in geographic concentration further anchors MPACT’s portfolio stability, potentially reducing risk from underperforming overseas markets.
• Active Portfolio Reconstitution and Debt Reduction Enhance Financial Flexibility
  • Sale of Japan properties at or above book value and redeployment of proceeds to debt reduction signal active management and disciplined capital allocation.
  • Lower cost of debt and improved interest coverage ratio create capacity for future acquisitions or distributions.
• VivoCity’s AEI Completion and Strong Rental Reversion Could Drive DPU Growth
  • Continued asset enhancement and space reconfiguration at VivoCity are yielding strong returns, potentially boosting future distributable income and supporting share price upside.
• Price-Sensitive Risks: Overseas Market Weakness and FX Volatility
  • Declining NPI in Greater China and Japan, negative rental reversions, and continued currency headwinds remain key risks.
  • Portfolio hedging (~93% of income derived from or hedged into SGD) provides some mitigation, but investors should watch for further overseas softness impacting overall DPU.
• Potential for Further Portfolio Optimisation and Acquisitions
  • The Manager’s ongoing discipline in portfolio optimisation, focus on Singapore, and strengthened balance sheet position MPACT to capitalise on new opportunities in Pan Asia’s gateway markets.
  • Any future asset purchases or further divestments could be price sensitive and affect share values.

Outlook: Navigating Challenges, Sharpening Focus on Core Markets

While MPACT faces persistent macroeconomic and geopolitical headwinds in overseas markets, its Singapore-centric portfolio continues to deliver resilient performance. The Manager’s active approach to portfolio reconstitution, cost management, and asset enhancement is driving stability and flexibility. Shareholders should monitor further asset sales, acquisitions, and DPU trends closely, as these remain key catalysts for future share price movement.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors are encouraged to read official announcements and consult their own advisors before making investment decisions. Performance may be subject to market risks, currency fluctuations, and other uncertainties.

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