Mapletree North Asia Commercial Trust

MNACT is a Singapore real estate investment trust (REIT) with the investment mandate of principally investing, directly or indirectly, in a diversified portfolio of income-producing real estate in the Greater China and Japan regions, which is used primarily for commercial purposes (including real estate used predominantly for retail and/or offices), as well as real estate-related assets.

MNACT is the first commercial REIT with properties in China, Hong Kong and Japan. Its portfolio comprises Festival Walk, a landmark territorial retail mall with an office component located in Hong Kong, Gateway Plaza, a premier Grade-A office building with a podium area in Beijing, Sandhill Plaza, a premium quality business park development situated in Shanghai, and six office buildings in Tokyo, Yokohama and Chiba. The nine properties cover a lettable area of approximately 4.2 million square feet, with a total book value of S$7.2 billion as of 31 December 2018.

MNACT is managed by Mapletree North Asia Commercial Trust Management Ltd., a wholly owned subsidiary of Mapletree Investments Pte Ltd.

Investment thesis

A pure-play overseas commercial REIT, Mapletree North Asia Commercial Trust’s resilient portfolio is underpinned by its Festival Walk mall in Hong Kong, and two properties in China (Beijing and Shanghai). MNACT continues to deliver robust rental reversions for its portfolio, while the entry into the Japanese commercial market in 2018 has diversified its income streams and enhanced its earnings quality.

In terms of financial position, MNACT’s gearing ratio remained stable at 39.0%. MNACT has hedged 85% of its debt (+7 ppt QoQ), while ~82% of its estimated FY19 distributable income has been hedged into SGD. MNACT is currently trading at FY19F and FY20F distribution yield of 6.1%.

We expect further astute acquisitions into the Japanese and Greater China commercial market. MNACT's investment properties are also subject to revaluation gains as the property prices in Asia continue to trend upwards.

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