MPACT’s Occupancy Improved In Q3 2023

SINGAPORE – Mapletree Pan Asia Commercial Trust (MPACT) recorded a higher portfolio occupancy during the third quarter, according to a report from ratings agency Morningstar that was published on Monday evening (30 October, SGT).

The trust’s portfolio occupancy level climbed to 96.3 percent in Q3 2023 compared to 95.7 percent during the preceding quarter. The better performance is attributed to higher occupancy rates of its assets in China, Hong Kong, and Singapore.

In particular, MPACT’s Singapore portfolio performed solidly, with robust tenant retention rates of 99.4 percent for Mapletree Business City and 84.0 percent for its other office buildings in the city-state.

Rental reversion has also been healthy, with the trust registering a positive 7.1 percent for Mapletree Business City and positive 9.0 percent for its other Singapore office properties.

More importantly, the trust made positive progress in renewing the lease of its largest tenant, Google. While the search giant is expected to relinquish some workspace, the overall impact should be minimal.

“Looking ahead, we anticipate the trust to face some competition from the upcoming Labrador Tower development that will add significant office supply in the Labrador submarket where the trust owns several office assets,” remarked Morningstar.

“Nevertheless, we expect the trust’s high-quality assets in the area to remain competitive and foresee the retail component to marginally benefit from an influx of new office occupiers.”

Meanwhile, Morningstar trimmed its rental growth assumption MPACT’s Festival Walk asset and its China office portfolio because of the sluggish office market outlook in China and the slower-than-expected retail recovery in Hong Kong.

Due to the above paragraph, Morningstar slashed the distribution per unit (DPU) forecasts for MPACT for the financial years 2024, 2025, and 2026 by 1.5 percent, 3.6 percent and 4.6 percent, respectively.