MCT

MCT ($1.485): Beating expectations, 3QFY15 distributable income climbed 13.0% y/y (or $5.1m) to $43.8m, lifting DPU by 11.5% to $2.08. YTD DPU increased 10.7% y/y to $0.06 to yield 5.4% trailing 12months on yesterday's close. 3QFY15 revenue rose 6.5% (or $4.5m) to $72.9m. All four properties contributed with positive rental reversions and step-up rents in existing leases, but the biggest increases come from VivoCity (+$3.4m) and PSAB (+$0.6m). NPI rose a faster 10.7% (or $5.3m) to $54.7m on utilities savings (-$0.5m) and prudent cost management in marketing and promotional events. Portfolio occupancy (99.5%) as at Dec14 is at historical high, with MLHF and Mapletree Anson fully occupied, PSAB slightly down to 98.4% (from 99.4%) and VivoCity up to 99.7% (from 98.7%). Shopper traffic and tenant sales at VivoCity YTD improved 0.7% and 0.5% y/y despite a challenging retail environment. 84% of all leases expiring by Mar15 have been committed, WALE is 2.0 years. As at Dec2014, MCT has $1.55b debt, of which 81% are long-term and 74% are fixed or hedged. Average term to maturity is now 3.0 years (vs 2.5 years in Mar14) after refinancing $50m debt expiring Apr2015 with 5-year fixed rate notes at 2.65% p.a., a further $200m bilateral term loan facility has been obtained in Jan15 to refinance the remaining debt. Annualized WACD is 2.18%. Gearing is reduced by 0.8pp since Mar14 to 37.9%, giving it a war chest of $293m for acquisitions and asset enhancements. During the quarter, MCT was upgraded by Moody’s from Baa2 to Baa1 for its consistently strong EBITDA growth, improvement in EBITDA margin, quality assets and active capital management. Management guides for outlook to remain relatively resilient, underpinned by low vacancy in offices and premised upon stable economic conditions in Singapore. Latest broker ratings: Credit Suisse maintains Outperform with TP $1.61 (from $1.59) Goldman Sachs maintains Buy with TP $1.59 Deutsche maintains Buy with TP $1.48 CIMB maintains Hold with TP $1.51 DBS maintains Hold with TP $1.46 Macquarie downgrades to Nuetral with TP $1.45 JPMorgan maintains Underweight with TP $1.40