Mapletree Commercial Trust

Mapletree Commercial Trust: HSBC initiates coverage with O/w rating and $1.00 TP, citing a portfolio of good-quality Singapore commercial assets with organic growth potential. With 39% of total leases (by rental income) expiring in FY12/13, REIT should benefit from positive rental reversions as average passing rents for VivoCity and PSA Building are 15-25% below spot rents.

Expect this organic growth to be a key contributor to MCT’s two-yr DPU CAGR of 7.9%. Completion of Alexandra Retail Centre (ARC) will add 4% to FY12/13 DPU. ARC, a
retail/office podium adjoining PSA Building, is currently under development and is slated
for completion by end-2011, which will add 4% to FY12/13 DPU. Defensive cash flows backed by diversified tenant mix as well as significant proportion of leases with annual rent step-ups.

At current price, REIT has an estimated 6.5% distribution FY12 Mar yield and 7.4% FY Mar13 and trades at 12% discount to RNAV.