VivoCity’s revenue contribution increased 5.1 percent year-on-year to $55.6 million in Q2 FY2020. Occupancies at Mapletree Commercial Trust’s office/business park properties within the HarbourArea Front.

UOB Kay Hian believes the Greater Southern Waterfront (GSW) development would spur massive gains for Mapletree Commercial Trust (MCT).

This comes as 91 percent of the trust’s portfolio valuation is found within GSW’s HarbourFront Area.

Chief among these is VivoCity, the revenue contribution of which increased 5.1 percent year-on-year to $55.6 million in Q2 FY2020. The five percent rental reversion posted by MCT on a portfolio basis was also mainly driven by VivoCity (+6.8 percent).

UOB Kay Hian noted that VivoCity’s actual occupancy also grew 5.1 percentage points to 99.8 percent with a committed occupancy of 100 percent – an impressive feat considering the property’s huge size, reported Singapore Business Review. The shopping centre also reportedly registered a healthy retention rate of 89.7 percent.

Occupancies at MCT’s office/business park properties within the HarbourArea Front –America Merrill Lynch HarbourFront (MLHF), PSA building and Mapletree Business City Phase I (MBC) – were also high in Q2.

MLHF retained its 100 percent occupancy, while the PSA building saw its occupancy rate climb 2.9 percentage points quarter-on-quarter to 93.5 percent.

UOB Kay Hian revealed that gross revenue and net property income (NPI) from office/business park properties also rose 0.4 percent and 0.2 percent year-on-year in H1, on the back of higher rental income from new leases at MBC I, higher rental income from renewed leases at PSA Building as well as step-up rents in current leases at both MLHF and MBC I.

MCT also secured four replacement tenants for the office space left vacant by Sumitomo Corporation, which will begin contributing from November to January next year.

The assets of MCT is also expected to expand by 21 percent to $8.9 billion in the event Mapletree Business City Phase 2’s (MBC II) acquisition push through. The property is set to be acquired at an NPI yield of five percent – higher than the 4.7 percent existing NPI yield of MCT’s portfolio. Shareholders on 15 October approved the proposed acquisition.

As to occupancy, Google presently occupies 680,000 sq ft at MBC II, accounting for 58.1 percent of its gross rental income. Other tenants include Covidien, Credit Agricole and Cisco Systems.

Post-acquisition, MBC I, MBC II and VivoCity will account for around 80 percent of MCT’s enlarged portfolio valuation and NPI.

Source: 21 October 2019