Mapletree Greater China Commercial Trust hit by higher property taxes

Future growth hinges on Sandhill Plaza.

While Mapletree Greater China Commercial Trust (MAGIC) faces the challenge of a stronger SGD and higher property taxes at Gateway Plaza, DBS Vickers Securities believes these factors are only speed humps in the near term.

"As MAGIC cycles through these headwinds over the next few quarters, the strength of core asset Festival Walk (c.70% of net property income (NPI)) as well as the boost from the Sandhill acquisition will shine through," it said.

The research house added that MAGIC offers an attractive yield in excess of 6% which we believe is high considering that its portfolio of quality properties are still delivering healthy (7-23%) rental reversions.

Moreover, full contribution from Sandhill Plaza yet to be realised.

"With the S$412m acquisition of Sandhill Plaza in Shanghai only completed in June 2015, MAGIC's earnings should receive a boost over the coming year, which should help mitigate any potential slowdown in HK, negative drag from higher property taxes in Beijing, and a strengthening SGD," it said.