MGCCT suffers 2.4% drop in Q2 distribution per unit, hit by additional tax on Beijing office

The exterior of Sandhill Plaza in Shanghai.
The exterior of Sandhill Plaza in Shanghai. PHOTO: MAPLETREE GREATER CHINA COMMERCIAL TRUST

SINGAPORE - Mapletree Greater China Commercial Trust (MGCCT) said its available distribution per unit (DPU) for the second quarter amounted to 1.765 cents, down 2.4 per cent over the payout of 1.808 cents for the same quarter last year.

Gross revenue for the three months to Sept 30 fell by 1.9 per cent to $83.1 million on the back of a 3.2 per cent drop in net property income to $67.3 million.

"Notwithstanding the weakening demand and market conditions in Hong Kong and China, we have delivered a steady set of results for the first half year, with a 4.6 per cent increase in gross portfolio revenue and a 3.6 per cent increase in net property income," said Ms Cindy Chow, chief executive officer of the trust manager.

"This is mainly attributed to the contribution from Sandhill Plaza which was acquired in June 2015 and the resilience of Festival Walk's performance, partly offset by the depreciation of Hong Kong dollar and renminbi against the Singapore dollar.

On the flipside, the additional property tax payable for Gateway Plaza, under a regulatory revision that took effect from July 1 had affected the second quarter results.

In view of the continued volatility in interest rates, the trust has extended the average term to maturity for its debt to 3.1 years and increased the proportion of fixed-rate debt to about 85 per cent, compared to March 31.

The average all-in cost of debt was 2.89 per cent as of Sept 30.

In addition, MGCCT's exposure to the Hong Kong dollar and renminbi volatility has been reduced, with about 80 per cent of the expected distributable income for this financial year hedged into Singapore dollar, Ms Chow noted.

MGCCT's distribution policy is to distribute on a semi-annual basis.

Its first distribution for the period from April 1 to Sept 30 is 3.61 cents per unit.

Unitholders can expect to receive the payout on Nov 25.

Looking ahead, MGCCT's performance for the full year will be affected by additional property tax arising from the change in property tax basis and value added tax imposed by the local authorities at Gateway Plaza in Beijing.