Mapletree Pan Asia Commercial Trust

2Q distributable income was SGD 106.1 million, up 2.1% year on year, and 2Q DPU was SGD 0.0201, up 1.5% year on year. 1H distributable income was SGD 213 million, down 0.8% year on year, and 1H DPU was SGD 0.0402, down 1.2% year on year. NAV was SGD 1.75; gross outstanding borrowings were SGD 6 billion; aggregate leverage improved to 37.6% from 37.9% last quarter; weighted average cost of debt declined 9 bps to 3.23% per annum; fixed-rate debt stood at 77.5%; and liquidity was about SGD 0.9 billion in cash and undrawn committed facilities. Management said the full-year cost of debt should stay around 3.23%, and the benefit from the SGD 200 million 7-year green notes at 2.45% does not materially change that near-term view. For China, management said occupancy could change by about 2% to 3% or 3% to 4% over the next few quarters depending on tenant retention, while for MBC they said reaching 95% occupancy by this FY would be a stretch. They also said Festival Walk rental reversion remains around plus/minus 10%, and VivoCity Phase 2 ROI is in excess of 10%.

The CEO’s tone was pragmatic and relatively upbeat on Singapore, while candid about Hong Kong and China staying difficult. Management emphasized strategic portfolio optimization, proactive debt reduction, and continued AEIs at VivoCity as key levers supporting earnings. On capital deployment, they said they have capacity for acquisitions but will only act if pricing and asset quality are compelling.

The CFO highlighted that 2Q distributable income and DPU rose year on year largely because of lower Hong Kong dollar and Singapore dollar borrowing costs and lower loan balances, partly offset by FX weakness in Hong Kong dollar and renminbi and higher withholding tax from Japan divestments. She noted Singapore NPI excluding Mapletree Anson rose SGD 6.2 million on lower utilities, higher rental income and compensation income, while overseas NPI fell due to lower occupancy and negative rental reversions. On the balance sheet, she pointed to gross borrowings of SGD 6 billion, gearing of 37.6%, average debt maturity of 3.5 years, fixed-rate debt of 77.5%, and about SGD 0.9 billion in liquidity; she also said full-year cost of debt should remain around 3.23%.

Analysts pressed management on whether funding costs could fall to about 2.7%, and the answer was no for the near term: that level was described as a hypothetical full-repricing rate, not a guidance target, with the actual average cost expected to stay near 3.23% this fiscal year. Questions on Festival Walk focused on weak retail sentiment and whether reversions might keep compressing; management said the mall is still seeing roughly plus/minus 10% reversions and is responding with heavier marketing and tenant mix changes, but Hong Kong remains soft. On China, management said leasing is seasonally front-loaded and warned occupancy could dip a few percentage points in the coming quarters; on MBC, they said leasing is progressing but slowly, with Google space still in negotiation and 95% occupancy by year-end looking difficult.