Newly-acquired Japan Properties Buffered Decline In Mapletree North Asia Commercial Trust’s Performance
July 28, 2020 — Mapletree North Asia Commercial Trust announced key financial information and operational updates for the quarter from 1 April 2020 to 30 June 2020.
Gross revenue for 1Q FY20/21 decreased by 10.7% to S$93.7 million, compared to 1Q FY19/20, while NPI declined by 19.5% to S$68.5 million. The decline was mainly attributed to rental reliefs granted to tenants and a lower average retail rental rate at Festival Walk as a result of the COVID-19 situation since early 2020, and a lower average occupancy at Gateway Plaza. This was partially offset by a higher average exchange rate of HKD, RMB and JPY against SGD in FY20/21 and the full-quarter’s contribution from MBP and Omori following the completion of their acquisitions on 28 February 2020.
Finance costs in 1Q FY20/21 increased by S$1.2 million compared to 1Q FY19/20 mainly due to borrowings to partially fund the acquisitions of MBP and Omori, offset by lower net interest costs arising from lower interest rates on floating debts in FY20/21 and interest savings from the refinancing of borrowings completed in FY19/20.
COVID-19 continued to impact the financial and operational performance of MNACT in this quarter, particularly in Hong Kong SAR. The retail environment in Hong Kong SAR remained challenging, affected by restrictive measures necessitated to contain the course of COVID-19 and by the consequential impact on the economy. To support and sustain the long-standing relationships with our tenants, the Manager extended S$18.1 million of rental reliefs in 1Q FY20/21, mainly to the retail tenants at Festival Walk.
The weaker economic outlook arising from the continuing US-China geopolitical tensions and COVID-19 has also affected the demand for commercial office spaces in Beijing and Shanghai, while the Greater Tokyo market was partly affected by COVID-19 restrictive measures and the work-from-home arrangements, with reduced inspection of office units by potential tenants during the quarter. Consequently, there was a slower leasing momentum.
The full-quarter contributions from mBAY POINT Makuhari (“MBP”) and Omori Prime Building (“Omori”), which were acquired in February 2020, buffered the decline in 1Q FY20/21 net property income (“NPI”) and further diversified MNACT’s income stream.
Ms. Cindy Chow, Chief Executive Officer of the Manager, said, “Some of the COVID-19 social distancing measures in Hong Kong SAR had eased in early May 2020 and we saw some improvement to the footfall at Festival Walk’s mall. However, a recent resurgence of infections in the city saw the authorities tightening social distancing measures in July 2020, with the latest round of measures effective from 29 July 2020 for at least one week. The uncertain COVID-19 situation and the US-China geopolitical tensions continue to unsettle the retail market. We have further extended rental reliefs to our retail tenants through to 2Q FY20/21, and are prepared to continue to support them should the situation persist or worsen.”
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