Mapletree Pan Asia Commerical Trust (SG:N2IU), or MPACT, was one of the top gainers on Tuesday on Singapore’s Straits Times Index, with shares rising 3.6%. Analysts remain bullish on the Singapore REIT (real estate investment trust), even after it announced a 9.1% decline in its distribution per unit (DPU) to S$0.022 for its Fiscal third quarter, which ended on December 31, 2023. Analysts are looking beyond the ongoing pressures, including high interest rates, and believe in the company’s long-term growth potential.
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MPACT, previously known as Mapletree Commercial Trust, is a REIT that invests in a diversified portfolio of income-producing real estate used mainly for office and/or retail purposes.
MPACT’s Q3 Performance
MPACT blamed the decline in its Q3 FY23/24 DPU on elevated interest rates and the absence of a one-time cross-currency interest rate swap gain recorded in the prior-year quarter.
The company highlighted that despite the impact of currency headwinds on overseas operations, its Q3 gross revenue and net property income (NPI) increased around 0.8% and 1.7%, respectively. This growth was fueled by the impressive performance of MPACT’s business in Singapore, which more than offset higher utility expenses.
Analysts Remain Upbeat About MPACT
Following the results, CGS-CIMB analyst Lock Mun Yee reiterated a Buy rating on N2IU stock with a price target of S$1.54, noting the company’s improved operational performance and positive rental reversions. Rental reversion is a metric that indicates whether new leases have higher or lower rental rates than before.
Yee noted that MPACT’s rental reversion was higher at 4.1% in the first nine months of FY23/24 compared to 3.2% in the comparable period of the prior year, thanks to narrowing negative reversions at the Festival Walk property in Hong Kong and the company’s assets in China and Japan.
Likewise, DBS analyst Rachel Tan also reiterated a Buy rating on MPACT shares with a price target of S$2.0. The analyst believes that the REIT’s Singapore assets remain solid, with its key asset, VivoCity, expected to remain a “strong anchor.” Moreover, Tan anticipates that there could be some improvement, though at a moderate pace, at the company’s Festival Walk property.
The analyst also noted that MPACT’s portfolio occupancy improved by 0.4 percentage points to 96.7% as of December 31, 2023.
What is the price target for N2IU?
With three unanimous Buys, N2IU stock earns a Strong Buy consensus rating. The Mapletree Pan Asia Commercial Trust share price target of S$1.70 implies over 22% upside potential. Based on the trailing 12-month distribution, MPACT offers an attractive dividend yield of nearly 7%.
Conclusion
Despite short-term pressures due to high interest rates and currency headwinds, analysts remain optimistic about Mapletree Pan Asia Commercial Trust due to its long-term growth prospects, supported by key assets like VivoCity and the Mapletree Business City. Also, N2IU stock offers an attractive dividend yield.
