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Mapletree Commercial Trust (MCT) registered a 2.8 percent increase in distribution per unit (DPU) to 4.03 cents for the first half of fiscal year 2015/2016.
Credit Suisse noted that revenue climbed 1.7 percent year-on-year to S$141 million, on the back of higher rents at VivoCity and Merrill Lynch Harbourfront (MLHF). MCT’s net property income rose 5.1 percent to S$109.1 million.
On a quarterly basis, DPU increased 2.5 percent to 2.02 cents, while gross revenue and net property income rose 1.9 percent and 5.1 percent to S$71.3 million and S$54.8 million, respectively.
Notably, VivoCity tenant sales rose 5.5 percent in Q2 FY16, boosted by more public holidays and stronger tourist arrivals, said Credit Suisse. As such, 1H FY2016 tenant sales growth turned positive to +1.6 percent (from -2.0% in Q1 FY2016).
Meanwhile, its office portfolio recorded rent reversions of +10.6 percent but with a low retention rate of 66.8 percent.
Despite this, the Swiss financial institution expects vacancy risk on MCT’s office to be limited until FY2018 as expiries for 2H FY2016 and FY2017 account for only 0.5 percent and 1.0 percent of total rental income, respectively.
With this, Credit Suisse upgraded MCT’s ratings from neutral to outperform “as near-term downside from the office portfolio appears limited, and we believe rent reversions will continue to remain above peers.”
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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