The manager of Mapletree North Asia Commercial Trust (MNACT) has reported a net property income (NPI) of $81.5 million for the 1QFY2022/2023 ended June, 4.1% higher than the NPI of $78.3 million in the corresponding year before.
Gross revenue for the quarter increased by 1.6% y-o-y to $104.7 million.
The higher NPI was said to be largely driven by the full-quarter contribution from Hewlett-Packard Japan Headquarters Building (HPB). The building was acquired on June 18, 2021.
The lower quantum of rental relief granted at Festival Walk also contributed to the higher NPI.
“In Hong Kong SAR, the restrictive measures that were implemented due to the 5th wave of Covid-19 were relaxed progressively in late April and May, and the first batch of consumption vouchers was disbursed by the authorities in April to stimulate the economy. Consequently, there was a lower quantum of rental relief granted in 1QFY2022/2023 of $0.2 million (compared to 1QFY2021/2022 of $4.0 million),” explains Cindy Chow, CEO of the manager.
“The second batch of consumption vouchers to be disbursed in August is expected to continue to help boost retail sales. The sustained recovery of retail sales will however depend on an improvement in the Covid-19 situation, the opening of the borders to international travellers and the pace of economic recovery,” she adds.
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The growth was, however, offset by the lower average rental rates at Festival Walk mall and Gateway Plaza, as well as the newly levied property tax at Sandhill Plaza. The property tax at Sandhill Plaza, which is located in Zhangjiang Science City, was implemented by the local authorities on April 1.
In China, the REIT provided total rental relief of around $0.2 million to affected food & beverage (F&B) and retail tenants in Gateway Plaza (Beijing) and Sandhill Plaza (Shanghai).
“For Gateway Plaza, two leases expired in 1QFY2022/2023, and both were re-let at a positive average rental reversion of 11% (compared to the negative average rental reversion in the previous quarter). The rent of one of the two expired leases was at a low base as it was leased during the height of Covid-19 in 2020. Both new tenants are from the technology and financial services sectors,” says Chow.
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Both the NPI and gross revenue do not include the contribution from The Pinnacle Gangnam, which was acquired on Oct 30, 2020. The REIT manager says it will share profit after tax of The Pinnacle Gangnam based on its 50% interest.
As at June 30, MNACT’s portfolio level stood at 97.2%.
During the quarter, Festival Walk saw shopper traffic decline by 10.0% y-o-y while tenants’ sales fell by 1.1% y-o-y. The lower figures were due to the tighter social distancing measures and dine-in bans imposed by the authorities due to Covid-19. Festival Walk saw gross revenue for the 1QFY2022/2023 dip slightly at 0.8% y-o-y. NPI stood grew slightly at 0.04% y-o-y.
Gateway Plaza saw gross revenue and NPI increase by 6.2% and 11.1% y-o-y respectively. This was due to the stronger RMB against the SGD and higher average occupancy rate, partly offset by a lower average rental rate.
Sandhill Plaza’s gross revenue and NPI for 1QFY2022/2023 fell by 3.7% and 7.8% y-o-y respectively mainly due to the newly levied property tax and lower average effective rents, offset by the stronger RMB against SGD.
MNACT’s properties in Japan and The Pinnacle Gangnam continued to deliver “steady growth” with higher revenue and NPI for 1QFY2022/2023 compared to the corresponding period last year.
Looking ahead, the REIT manager is expecting positive developments in Hong Kong with the newly-appointed government administration indicating plans to prioritise re-opening Hong Kong SAR’s borders.
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The manager is also expecting to see positive news from Beijing as new office supply is expected to remain low in the city, which may keep vacancy rates from rising further.
For Shanghai, companies from the technology, media and telecommunications, artificial intelligence (AI), software services and pharmaceutical sectors will continue to contribute to demand for the business park offices, says the REIT manager.
Finally, the office market is expected to become more stable in Tokyo as the market “approaches an equilibrium point between rent pricing and tenant demand”. Vacancy is also expected to remain low in the Gangnam Business District in Seoul, where The Pinnacle Gangnam is located due to limited supply and “solid leasing demand”.
Units in MNACT closed flat at $1.20 on July 21.
