Mapletree Commercial Trust's DPU jumped 12.4% on strong rental reversion

Revenue also up by 12.9%.

According to CIMB, Mapletree Commercial Trust's 4QFY3/14 revenue rose by 12.9% yoy and DPU rose by 12.4% yoy. FY14 DPU was slightly better than expected at 104% of CIMB's forecast due to strong rental reversion and the acquisition of Mapletree Anson.

Here's more:

Another stellar quarter
Mapletree Commercial Trust (MCT) reported 4QFY14 revenue of S$68.6m (+12.9% yoy) and DPU of 1.953 Scts (+12.4% yoy), mainly driven by the 37.6% rental uplift in leases both renewed and re-let at VivoCity. 

Meanwhile, the occupancy for the retail portfolio grew to 98.6% (from 97.5% in 4QFY13), mainly attributed to the higher occupancy at ARC. During the year, both shopper traffic and tenant sales grew by 1.4% and 5.6%, respectively. 

The occupancy cost at VivoCity remained largely unchanged at 17%. Similarly, the office portfolio also posted good rental reversion of 19%, with occupancy of the office remaining steady at 97.9%.

Well shielded from rising interest rates
Compared to a year ago, the leverage ratio dipped slightly to 38.7% (from 40.9%). Although this is higher than the industrial average of 31.8%, we seek comfort in MCT’s accessibility to loans and the fact that the next tranche of debt is only due to be refinanced in FY15/16. 

The all-in interest cost at the moment stands at 2.17% (2.18% in 3QFY14), with 64.3% of its total debt under a fixed rate. With these structures in place, we expect MCT to be well shielded from any hikes in interest rates.

We maintain an Add rating on a stable outlook
Looking ahead, with 16.3% of retail space and 7.5% of office space up for renewal in FY14/15, we are confident that the high portfolio occupancy of 98.2% will be maintained, particularly on the back of the strong positioning of VivoCity and a stronger office rental market outlook. We maintain our Add rating with a slightly higher target price of S$1.33.