Mapletree North Asia Commercial Trust reports dismal Q1 results due to Covid-19

MAPLETREE North Asia Commercial Trust on Monday posted a 10.7 per cent drop in its gross revenue to S$93.7 million. Its net property income declined 19.5 per cent to S$68.5 million for its first quarter ended June 30.

The decline was mainly due to rental reliefs granted to its tenants and a lower average retail rental rate at its Festival Walk property in Hong Kong, as a result of the Covid-19 situation since early 2020, as well as a lower average occupancy at Gateway Plaza, its office building in Chaoyang District in Beijing.

In its key financial information and operational updates, it said that Covid-19 continued to impact the financial and operational performance, particularly in Hong Kong.

"The retail environment in Hong Kong SAR remained challenging, affected by restrictive measures necessitated to contain the course of Covid-19 and by the consequential impact on the economy. To support and sustain the long-standing relationships with our tenants, the manager extended S$18.1 million of rental reliefs in Q1 FY20/21, mainly to the retail tenants at Festival Walk," it said.

It added that the weaker economic outlook arising from the continuing US-China geopolitical tension and Covid-19 has also affected the demand for commercial office spaces in Beijing and Shanghai. The Greater Tokyo market was partly affected by Covid-19 restrictive measures and the work-from-home arrangements, with reduced inspection of office units by potential tenants during the quarter. Consequently, there was a slower leasing momentum. 

When some of the social-distancing measures in Hong Kong eased in early May 2020, the Reit saw some improvement to the footfall at Festival Walk's mall.

"However, a recent resurgence of infections in the city saw the authorities tightening social-distancing measures in July 2020, with the latest round of measures effective from July 29 2020 for at least a week.

"The uncertain Covid-19 situation and the US-China geopolitical tensions continue to unsettle the retail market. We have further extended rental reliefs to our retail tenants through to Q2 FY20/21, and are prepared to continue to support them should the situation persist or worsen."

The Reit's next financial results announcement and distribution will be for the six-month period ending Sept 30, 2020.