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Tuesday, October 08, 2019

Retail+Office Hybrid SREITs - Mapletree(s) VS Suntec

3rd quarter SREITs result announcement soon will be started with SPH REIT, you could refer SREITs Result Date page to track all SREITs result annoucement date. For this post ,I would like to do 1 more round of SREITs comparison for Retail+Office Hybrid sector, up to 2nd quarter result.
Pug Owl Hybrid
There are 6 SREITs below that get income from both retail and office sectors.
1) Mapletree Commercial Trust (Majority Office; Retail 46%)
2) Mapletree North Asia Commercial Trust (Majority Retail; Office 40%)
3) Suntec REIT (Majority Office; Retail 29%)
4) Capitaland Commercial Trust  (Majority Office; Retail 14%)
5) OUE Commercial Trust (Majority Office; Retail 13%, before merger)
6) Starhill Global REIT (Majority Retail; Office 12%)

I will only compare the first 3 REITs as their minor sector contribute more than 25%.
Items Unit MCT MNACT Suntec
Lease Profile
Portfolio Occupancy % 98.35 98.9 98.67
Income Received in SGD % 100 0 89.03
Highest Lease Maturity in 5 Years* % 25.1 20.7 25.06
Weighted Average Lease Expiry, WALE* year 3 2.8 3.25
Weighted Average Land Lease Expiry* year 77.51 37.4 74.06
Debt Profile
Interest Cover Ratio time 4.68 4.07 2.88
Cost of Debt % 2.82 2.57 2.77
Fixed Debt over Total Debt % 78.42 82.22 71.65
Unsecured Debt over Total Debt % 100 90.87 88.96
Gearing Ratio* % 33.1 36.9 38.3
Highest Debt Expiry in 5 Years* % 20 26 19.42
Weighted Average Debt Expiry* year 3.4 3.46 3.5
Diversification Information
Major Sector Contribution % 53.92 60.22 64.44
Top Geographical Location Contribution % 100 65.35 89.03
Top Property Contribution % 49.94 65.35 55.58
Top Tenant Contribution % 3.94 8.35 4.23
Top 10 Tenants Contribution % 25 32.03 22.33
Share Related Information
REIT Manager's Shareholding* % 2.62 4.37 0.112
QoQ Dilutive Shares Increase % 0.65 1 0.84
Financial Metrics
Property Yield (Annualized) % 5.15 4.63 3.34
Distribution on Management Fees time 8.66 9.29 5.54
Distribution on Capital (Annualized) % 3.98 3.44 2.94
Distribution Margin % 59.71 58.76 58.73
Support over Distribution % 0 0 0
Growth Profile
QoQ NAV per Unit Growth % 1.8 2.04 -0.25
QoQ DPU Growth % 0.83 0.8 -0.49
QoQ Interest Cover Ratio Growth % -0.76 1.25 -2.61
QoQ Property Yield Growth % -0.28 -0.06 -0.44
QoQ Distribution on Capital Growth % -0.27 -0.23 -0.72
QoQ Distribution Margin Growth % 0.08 -0.16 -0.05
Note:
i) Value without * is weighted average value for past 5 years, may be adjusted due to acquisition/disposal, equity fund raising or any events that affect average value drastically.
ii) All information are based on best effort without any guarantee on accuracy & reliability.

Summary:
1) Lease Profile Winner - Suntec
2) Debt Profile Winner - Both Mapletree
3) Diversification Profile Winner - Mapletree Commercial & Suntec
4) Share Related Profile Winner - Mapletree Commercial
5) Financial Metrics Winner - Mapletree Commercial
6) Growth Profile Winner - Mapletree Commercial
7) Overall with Most Green - 1st Mapletree Commercial, 2nd Mapletree North Asia

Relative Valuation:
1) Mapletree Commercial Trust - $ 1.63 to $ 1.85 (Current Price $ 2.36)
2) Mapletree North Asia Commercial Trust - $ 1.12 to $ 1.33 (Current Price $ 1.25)
3) Suntec REIT - $ 1.76 to 1.86 (Current Price $ 1.88)

Mapletree Commercial Trust has just joined STI, and with its strong fundamental, its price would likely to remain at premium. Whereas Mapletree North Asia Commercial Trust and Suntec REIT are both in STI reserve list, their prices are currently close to 5 years average relative value.

For Suntec, its low interest cover ratio is a concern, its manager shareholding % is at the low side and figures in growth profile seems worrying too. Fundamentally,  I believe that Mapletree North Asia Commercial Trust is a better choice; but 65% of its income is contributed from its flagship property - Festival Walk which is located in Hong Kong. And everyone will be very well aware of Hong Kong situation now.
Wish the protest end soon
As of now, no information is disclosed on how badly Festival Walk affected; and no one could know when this protest will end. You may want to ask yourself the following questions before you make any decision:
i) Do you think this protest will last long ? or only temporary ?
ii) Do you think Hong Kong economy and tourism industry will recover after protest end ?
iii) Do you think recovery time would take a long time ?
iv) Do you think Festival Walk income will be affected drastically or take a long time to recover ?
v) Do you have warchest to average down should price drop further ?
vi) Can you hold on to this REIT if prices should price drop further ?
vii) Are you willing to cut loss should worst case happen ?
If your answers to above are positive, then you could consider this REIT. I will again employ the same logic as First REIT from my previous post: if Hong Kong protest end, can we still can buy at current price?

Some side note, Fortune REIT is another REIT that listed in SGX with properties in Hong Kong. Its share price has also dropped a lot (current price HK$ 8.80) and currently trading close to its 52 weeks low. Would you consider this REIT as well?

Updated @ 17/10/19
Fortune REIT delisted from SGX on 10/10/19.

2 comments:

  1. Yes, basing on other HK stocks, prices has seem to stabilise.

    Checking against google, festivla walk and the restaurants inside seem to be still operating. And most recent results has not showed any negative effect yet.

    ReplyDelete
    Replies
    1. Can always buy in batch by batch if you are confidence about its fundamental.

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