Mapletree Commercial Trust

Mapletree Commercial Trust: 2QFY15 DPU increased 9.4% y/y to 1.97¢, while distributable income rose 11% to $41.4m. Revenue rose 6.3% to $70m, while NPI rose 8.8% to $52.1m, mainly due to positive rental reversions and step up in existing leases for VivoCity and PSA Building. Portfolio occupancy held steady at 98.5% with WALE of 2 years. Meanwhile, aggregate leverage at stood at 38% (-0.3ppt), with all-in interest cost of 2.17%. MCT announced a $5.5m AEI for VivoCity, where it would convert the B1 car park space and lower yielding space into prime retail space, to leverage the strong traffic flow from a direct connection to the Harbourfront MRT station. Works should commence next quarter, and expected to complete between April and September 2015. The AEI is estimated to yield an ROI of 17%. While management notes a softer retail outlook, demand for prime space remained strong in the quarter, especially from new or expanding retailers. Brokers broadly like MCT’s resilient assets, but their TPs which are near to current share price insinuate that positives are priced in. BVPS of $1.16 translates to 1.26x P/B, with annualized yield of 5.4% annualized 2QFY15 yield. Latest broker ratings: Deutsche maintains Buy with TP of $1.48 CIMB maintains hold with TP of $1.47