Singapore Reit tops up payouts to unitholders after Festival Walk mall closure due to Hong Kong protests

Protesters vandalise Festival Walk mall in Hong Kong on Nov 12, 2019.
Protesters vandalise Festival Walk mall in Hong Kong on Nov 12, 2019.PHOTO: REUTERS

SINGAPORE (THE BUSINESS TIMES) - Mapletree North Asia Commercial Trust (MNACT) has topped up its distribution to unitholders to mitigate the impact from 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 the retail tenants. The office tower was shut 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.

On Friday (Jan 17), MNACT announced that its distribution per unit (DPU) for the third quarter (Q3) ended Dec 31 fell 13.3 per cent to 1.671 cents, down from 1.927 cents a year ago.

It said the Q3 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 (Q3 and Q4 FY19/20, and Q1 FY20/21), but as the mall reopened earlier than expected, MNACT said it will not have a distribution top-up in Q1 FY20/21.

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

Unitholders will receive their Q3 distribution on March 10. The books closure date is Jan 28 at 5pm.

MNACT said its Q3 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, whose acquisition was completed on May 25, 2018.

Distributable income edged down 0.8 per cent to $177.2 million.

Aside from the Festival Walk mall in Hong Kong and its portfolio of properties in Japan, MNACT also has office properties in Beijing and Shanghai. The Reit manager said that slower economic growth and trade tensions continued to drag on leasing activities in those properties, with revenue falling on lower average occupancy rates and the yuan's lower average rate.

MNACT units were trading up one cent or 0.81 per cent to $1.25 at 10am on Monday.