Singapore Reit tops up payouts after HK mall closure

Mapletree North Asia Commercial Trust (MNACT) has topped up its distribution to unit holders to mitigate the impact of the closure of its Festival Walk mall in Hong Kong from damage inflicted in recent protests.

The mall in Kowloon Tong, one of Hong Kong's largest shopping centres, was closed from Nov 13 to Jan 15, during which time MNACT was unable to collect rental from retail tenants. The office tower was closed for a shorter period, from Nov 13 to 25. Rental collection resumed on Jan 16 this year for the mall, and Nov 26 last year for the office tower.

Last Friday, MNACT announced that its distribution per unit (DPU) for the third quarter ended Dec 31 fell 13.3 per cent to 1.671 cents, from 1.927 cents a year ago. It said the DPU included a distribution top-up of $25.8 million to mitigate the impact of Festival Walk's closure on distributable income, which, after the top-up, came in 12.5 per cent lower at $53.4 million.

The Festival Walk top-ups were to be paid out over three quarters (third and fourth quarters of FY19/20, and first quarter of FY20/21), but as the mall reopened earlier than expected, MNACT said it will not have a distribution top-up in the first quarter of FY20/21.

The distribution top-ups are funded from capital, and will be paid as capital income distribution to unit holders. When the insurance claims proceeds are received, any amount that exceeds the distribution top-ups will be paid as distributable income from operations to unit holders, said MNACT.

Unit holders will receive their third-quarter distribution on March 10. The books closure date is Jan 28 at 5pm.

MNACT said its third-quarter revenue dropped 36.3 per cent to $67.28 million, on the back of lower contributions from Festival Walk mall, from a Japan property that was converted to multi-tenancies from single tenancy, and from Gateway Plaza due to lower average occupancy.

Net property income (NPI) for the quarter fell 40 per cent to $50.8 million, and distributable income shrank 12.5 per cent to $53.4 million. For the nine months ended Dec 31, DPU was 5.558 cents, down from 5.734 cents a year ago.

Revenue shrank 8.9 per cent to $277.7 million and NPI dipped 10 per cent to $220.6 million, mainly due to lower revenue from Festival Walk. This was partially offset by full nine-month contribution from the Japan properties. Distributable income edged down 0.8 per cent to $177.2 million.

MNACT also has office properties in Beijing and Shanghai.

The Reit manager said slower economic growth and trade tensions continued to weigh on leasing activities in those properties.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on January 21, 2020, with the headline 'Singapore Reit tops up payouts after HK mall closure'. Print Edition | Subscribe