The Concerning Performance of Mapletree Pan-Asia Commercial Trust:- What Should I Do Moving Forward?

-

On 31st July 2023, Mapletree Pan-Asia Commercial Trust (MPACT) released their 1st Quarter FY23/24 earnings.  The performance is summarized below:

Year-on-year performance is not too meaningful in my opinion, as the performance a year ago was meant for Mapletree Commercial Trust (MCT), prior to the merger.  Quarter on quarter, performance is mixed.  Gross revenue and net property income both increased, but operating expenses and finance cost increased by a larger extent, dampening the amount available for distribution per unit, down 3.1% quarter-on-quarter, and down by more than 12% year-on-year.  This is definitely far from the bright prospects and the positive synergistic effects the management painted prior to the merger.

Although the results do not paint a rosy picture, there are little bright spots.  Performance of Mapletree Business City and Vivocity remains robust, and they are the main drivers that helped to support the overall performance of the REIT.  More importantly, their positive rental reversions will help to further boost their performance in the near term.  However, performance of properties in China and Hong Kong remains lackluster.  Their negative rental reversions highlights that their rental income will remain depressed in the near term.  This is definitely not good news, especially when news of slowing economy and low GDP numbers in China are snagging the headlines recently.  The only possible positive thought from here is that the negative rental reversion for Festival Walk is less negative compared to previous quarter, signaling an improvement in its operating conditions.


Overall, as a dividend investor, MPACT doesn't seem to be aligning with the rules.  From a fundamental perspective, the MPACT has evolved significantly from MCT, as MCT was 100% Singapore-focused, but for MPACT, local properties only account for slightly more than 50% of their portfolio.  Since the merger, the overseas properties have largely been a drag, and if not for the superb performance of local properties, the overall performance of MPACT would have been worse.  

However, as the performance of Festival Walk is slowly improving, I decided to give MPACT another year to prove itself, and let the numbers of upcoming quarters speak for the management.  As much as I will just hold on to my existing shares in MPACT, I will not inject new capital through dollar cost averaging into this REIT, and I will not reinvest its dividends into MPACT until the rental reversions are all positive, and the REIT starts to register distribution per unit (DPU) growth.  For now, I will divert the dividends to reinvest in MPACT's competitor, Capitaland Integrated Commercial Trust (CICT).  

In the latest news of potential bankruptcy warning by WeWork, CICT and MPACT, both of whom are landlords of WeWork, have yet to release any updates to inform investors of the potential impact of what is to come.  WeWork is said to occupy the entire building at 21 Collyer Quay and part of Funan under CICT, and also occupy Mapletree Anson under MPACT.  How badly the rental income for the upcoming quarters are going to be impacted remains to be seen, but I believe any negative impact will be temporary.  This event will unlike change my plans for now.

Is this the right move, or will I regret in future for not reinvesting in MPACT for it's possibly bright future as the management has painted prior the merger?  All these seems like a gamble for the unknown, and I prefer to just work with what I know for now.  I believe not selling my existing shares in MPACT is already my most comfortable move currently in the 'bet' towards the 'bright future' it may have, without any regrets.  Only time will tell whether I have made the right decision.  Keeping fingers crossed, Barista FIRE, here I come...!  

Comments

Post a Comment

Popular posts from this blog

How Does SGD 200K Of Annual Dividends Sound To You?

-
Image
In the recent video by The Fifth Person, they interviewed the famous local blogger (and budding YouTuber) AK, author of A Singaporean Stocks Investor (ASSI) .  In his blog and in this interview, AK revealed that his portfolio has compounded and delivered an annual dividends of SGD 200K in 2022!  This is definitely eye-popping, a source of envy and admiration, and an inspirational figure whom I wish to follow. That is a goal that I would can only wish to reach, but currently it is definitely far-fetched, especially when my annual dividends is just 10% of that amount, and I am already planning to Barista FIRE in 3 years time.  Personally, aiming for 20% of that amount in annual dividends sounds more realistic and achievable to me.  However reading his blog and 'listening' to what AK says to himself is an enjoyment.  He has always preached his investing philosophy of 3P's, being prudent, patient and pragmatic.  In addition, his advice for investors with the mnemonics of "
Read more

2 Milestones Reached and A First-Time Income- BHS, 0.5M and SBL

-
Image
In this short post, I am updating on two milestones I finally hit, and a first time ever income received from an unexpected source.  As above, the milestones are that I have achieved the Basic Healthcare Sum (BHS) in my Central Provident Fund Medisave Account (CPF- MA), which is SGD 68.5K in 2023, and for the first time, my portfolio value has exceeded half a million in value (as of 31st July 2023)!  The first time income source is that I made some pennies from my Central Depository (CDP) from the Securities Borrowing and Lending (SBL) Program. Achieving BHS Earlier in April, I made the decision to speed up the contribution towards my CPF-MA by contributing to only my MA instead to all 3 accounts, aiming to hit the Basic Healthcare Sum (BHS) of SGD 68.5K in 2023.  Just for context, I am self employed so I can have the choice to which account in CPF I can contribute my income to. I am pleased that I have finally reached my goal and hit the BHS in August 2023!  A small milestone achieve
Read more

A Review Of The REITs' Quarterly Performances

-
Image
Back in January 2023, the interest rates reached 4.25-4.50%.  Since then, interest rates continue to gradually climb till 5.25-5.50% in July 2023, where it held constant till today.  As such, it is a good time to review how the crazy climb in interest rates in 2022 impact the performances of REITs, which are highly leveraged and more sensitive to interest rates compared to other listed companies.  In the comparison below, I only focused on the REITs and Trust I hold in my portfolio. 1)     CapitaLand Ascott Trust (CLAST)   " CLAST's properties saw strong demand as international travel continued to recover.  CLAST’s revenue per available unit (REVPAU) in 2H 2023 reached 103% of pre-pandemic levels in 2H 2019 on a pro forma basis, increasing by 10% y-o-y to S$157.  REVPAU also rose 23% y-o-y to S$148 for FY 2023.  In 4Q 2023, majority of CLAST’s key markets such as China, Japan, United States of America (USA) and Vietnam also registered y-o-y REVPAU growth.  CLAST’s gross profit
Read more