Mapletree North Asia Commercial Trust's net property income up 49% in Q3

MAPLETREE North Asia Commercial Trust (MNACT) reported that its net property income (NPI) jumped 49 per cent to S$75.7 million for the third quarter ended Dec 31, 2020, in a business update after trading hours on Thursday.

Gross revenue for the period rose 49.7 per cent to S$100.7 million, primarily because there was no rental collection for Q3 FY19/20 during the temporary closure of Festival Walk mall in Hong Kong from Nov 13, 2019 to Jan 15, 2020 and its office tower from Nov 13 to 25, 2019.

Additionally, revenue and NPI from the Japan properties were higher during the recent third quarter due to the contributions from office buildings in Tokyo and Chiba (known as MBP and Omori), acquired on Feb 28, 2020.

For the nine months year-to-date results, NPI declined by 2.3 per cent to S$215.4 million, on the back of higher rental reliefs granted to support tenants at Festival Walk mall and lower average rental rates at Festival Walk mall and Beijing's Gateway Plaza.

MNACT's gross revenue year-to-date was up 4.7 per cent to S$290.8 million.

As at Dec 31, 2020, MNACT's committed occupancy was 96.9 per cent. Both committed and uncommitted credit facilities that remained undrawn amounted to S$492.6 million. Together with cash and bank balances of S$223.9 million, MNACT has sufficient liquidity to satisfy its working capital and operating requirements as well as to meet its maturing debt obligations, said the manager.

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Aggregate leverage ratio increased marginally to 41.3 per cent from 40.1 per cent a quarter ago mainly due to the acquisition of The Pinnacle Gangnam, which is fully funded by borrowings, and the lower portfolio value arising from net translation loss from the weaker Japanese yen and Hong Kong dollar offset by a stronger Chinese yuan.

To mitigate the impact of interest rate and foreign exchange volatilities, about 75 per cent of MNACT's interest cost has been hedged into fixed rates, and about 90 per cent of the expected distributable income for H2 FY20/21 has been hedged into Singapore dollars as of Dec 31, 2020.

In its outlook, Cindy Chow, CEO of the manager, said: "While progress with vaccines have fuelled optimism of a global economic recovery, uncertainties stemming from the Covid-19 situation remain."

In Hong Kong, following a resurgence of Covid-19 cases in the city in mid-November 2020, tighter social distancing measures were re-imposed and extended till Feb 3, 2021, subject to further review, she noted.

"We expect these measures to continue to impact the retail market," she added.

For Festival Walk, the average renewal or re-let rental rate for FY20/21 is expected to be lower compared to FY19/20, said the Reit manager, adding that its priority is to maintain high occupancy.

Its other markets - China, Japan and South Korea - are also facing restrictions and safe distancing measures amidst Covid-19 cases.

MNACT's units closed at 97.5 Singapore cents on Thursday, down 1.5 Singapore cents or 1.52 per cent prior to the announcement.