Bond Articles


Mapletree North Asia Commercial Trust: Diversification Goals

Timothy Ang  |   31 May 2021  |    22 views

Listed on the SGX on 7 March 2013, Mapletree North Asia Commercial Trust (MNACT) owns a portfolio of 12 primarily commercial properties in Japan, South Korea, and Tier-1 and Tier-2 cities in China.

Portfolio (as at 31 March 2021)

  • Festival Walk: Hong Kong; occupancy 99.9%; 47% FY20 revenue; value: S$4.5bn;
  • Gateway Plaza: China; occupancy 92.9%; 20% FY20 revenue; value S$1.3bn;
  • Sandhill Plaza: China; occupancy 97.9%; 6% FY20 revenue; value S$501mn;
  • Japan Properties: Japan; occupancy 97.8%; 26% FY20 revenue; value S$1.3bn;
  • The Pinnacle Gangnam: South Korea; occupancy 96.5%; 1% FY20 revenue; value S$272mn;

Metrics (as at 31 March 2021)

  • Market cap (as at 28 May 2021): S$3.55bn
  • Assets under management: S$7.9bn
  • Stakeholder: sponsor Mapletree Investments Pte Ltd (37%)
  • Portfolio occupancy: 97.0%
  • Aggregate leverage: 41.5%
  • Interest cover: 3.7x

Commentary

New bond to fund acquisition of Hewlett-Parkard Japan Headquarters for S$490.6mn. The freehold property has a balance lease term of 8.8y by HP; which occupies 100% of the building. HP is rated investment grade BBB+ by Fitch and will become MNACT’s third largest tenant by gross rental income. The property was acquired 4.4% below independent market valuation.

Post acquisition, total portfolio occupancy will improve from 97% to 97.2%, and WALE from 2.3y to 2.6y. Aggregate leverage will increase slightly from 41.5% to 41.9%. The acquisition is a step towards diversification from MNACT’s high exposure to Festival Walk.

Strong sponsor backing. MNACT is 37% owned by sponsor Mapletree Investments Pte Ltd. As at 31 March 2020, the sponsor owns and manages S$60.5bn of office, retail, logistics, industrial, data centre, residential and lodging properties. The Group manages four Singapore-listed REITs and six private equity real estate funds, which hold a diverse portfolio of assets in Asia Pacific, Europe, the UK and the US. The Group also has an extensive network of offices in Singapore, Australia, China, Hong Kong SAR, India, Japan, Malaysia, Poland, South Korea, the Netherlands, the UK, the US and Vietnam.

Well-spread debt maturity profile. No higher than 24% of debt maturing in any one year until 2027. Uncommitted undrawn credit facilities of S$514mn and cash of S$252mn, compared to S$763mn of debt maturing in the next 2 years.

 

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