Mapletree Commercial Trust's NPI rose 2.2% to $87.87m in Q3

This was largely driven by higher YoY contribution from VivoCity.

Mapletree Commercial Trust (MCT) saw Q3 bring in a healthy set of results with its net property income (NPI) growing 2.2% YoY to $87.87m in Q3 FY18/19 from $85.96m, an announcement revealed. Revenue also inched up 2.6% YoY to $112.54m from $109.67m.

Distributable income edged up 0.8% YoY to $66.99m in Q3 FY18/19 from $66.45m, whilst distribution per unit (DPU) advanced 1.3% YoY to $0.0233 from $0.023, the firm’s financial statement highlighted.

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The increases seen in Q3 were mainly attributed to higher YoY contribution from VivoCity, with gross revenue and NPI rising 4.6% and 3.9% respectively, due to higher rental income for new and renewed leases, MCT explained. As of December 2018, VivoCity’s occupancy level was at 99.9%.

“YTD, we have embarked on a series of changes at VivoCity, and this includes some rigorous management of tenant mix particularly in Q3 FY18/19,” Mapletree Commercial Trust Management’s CEO Sharon Lim added in a statement. She further highlighted how a set of asset enhancement initiatives (AEI) at VivoCity included the conversion of 32,000 sqft of space at level 3 into a public library, as well as the utilisation of bonus gross floor area to extend basement 1 to house additional retail stores.

Likewise, higher gross revenue and NPI from office properties PSA Building, Mapletree Anson and Bank of America Merrill Lynch Harbourfront (MLHF) also boosted MCT’s earnings during the quarter. The firm attributed to fully occupancy at MLHF, and higher occupancy and the effects of step-up rents in existing leases at Mapletree Anson and PSA Building.

As of December 2018, occupancy for MCT’s office and business park assets remained high, ranging from 96.1% at PSA Building to full occupancy at MLHF.

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That being said, the firm noted how its NPI was offset by higher finance expenses and higher management fees, on top of unrealised foreign exchange loss. Property expenses were also 4.1% higher QoQ in Q4 at $24.7m due to higher property maintenance expenses, marketing and promotion expenses, and property taxes.

Whilst Singapore’s retail market and office market showed signs of stabilisation and good performance in 2018, the business park market recorded a relatively patchy performance on the back of limited supply against a high demand. “As such, significant improvements in islandwide occupancy is not expected, and the performance gap between the two business park tiers is likely to persist.”

Nevertheless, MCT’s portfolio is expected to remain resilient given VivoCity’s consistent performance, as well as the manageable lease expiries in the firm’s office and business park properties.