Looking at Mapletree North Asia Commercial Trust

I had looked at Mapletree North Asia Commercial Trust (MNACT) when I started investing in late 2015. However a few reasons make me reluctant to invest in it then.

High Gearing 
At almost 40% which may result in rights issues.Over the years I have learnt that rights may not be bad and give a good chance to buy more at a cheap price like the recent Frasers Logistic & Industrial Trust Rights issue.Most Mapletree Reits has high gearing. So it is unavoidable. Over the years since 2015, gearing still as high near 40%. Most of time, they issue placements rather than rights.

Young Reit
listed less than 6 years ( 3yrs in late 2015)

Only 2 Properties in 2015
It had since grow to 9 properties 

• Festival Walk (Retail + Office, Hong Kong)
• Gateway Plaza (Grade A Office, China )
• Sandhill Plaza (Business Park, China)
• 6 Japanese Office Properties (Chiba, Tokyo, Yokohama) 

MNACT to me is like a mirror of Mapletree Commercial Trust (MCT) but in oversea properties with Festival Walk as its core just like Vivocity with MCT.


Festival Walk

Festival Walk is located next to City University of Hong Kong, with ample nearby estates as well as international schools (Need to Zoom in Google maps to have more displayed). I believe these schools will attract properties demand and hence more people staying nearby Festival Walk and more footfall. The Kowloon Tong MTR is located nearby with a walkway link to Festival Walk. Festival Walk contribute 63% of MNACT Net Property Income.

DPU Growth

The manager did a good job growing the DPU which  has been increasing with a CAGR of 4.65% for the past 5 years. 

Occupancy and Rental Performance

The occupancy rate at Festival Walk is amazing, keeping at 100% whereas the rest is pretty good too. Positive rental reversion for the last 4 quarters is also show a very good results. Expects room for further yield improvements for the Japan properties as some of the leases are currently under-rented (Source). Lease expiry for the next 2 years mainly come from Festival Walk but I think it won't haven any issue getting 100% occupancy rate.

Gearing
Gearing is at 39%, however analyst expects this ratio to fall when its existing portfolio of assets are revalued at the end of FY18, particularly given the sharp rise in asset values in Hong Kong. (Source)

Conclusion
I like how MNACT have performed and grew over the years, DPU has been growing nicely. 1H2018/2019 Dividend is 3.807cents, 2H usually give a slightly higher dividends. Estimating a full year dividend to be 7.707cents, at a price of $1.10 gives a yield of 7%. PB ratio of 0.83.

Risk for this Reit will be of the weakening of foreign currency against SGD as well as the economy of that region. And Festival Walk contributed 63% of Net Property Income which is a concentration risk as well.

Vested @ 1.09

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CapitaRetail China Trust 2018 Q3 Result

CapitaRetail China Trust (CRCT) Q3 results give a few positives. This show that China's domestic consumption is strong as the middle income grows. Results also show rise in shopper traffics and sales of tenants. DPU increase 1.7% Y-on-Y, YTD DPU of 7.8cents present a 7.7% yield at the price of $1.36. Debt has been refinance and hence no refinancing needed till 2020.

Rental reversion
Rental reversion is tremendously high for properties acquired in 2017, CapitaMall Xinnan and Rock Square.

Conclusion
Gross revenue has fallen YTD 2018 in terms of SGD however NPI( Inluding Joint Venture Rock Square) has approximately the same as YTD 2017. However, Distribution amount is higher in 2018. This is likely because of the distribution for the divestment of Anzhen.

So once this distribution from Anzhen eased, DPU should drop. I believe CRCT's  management is confident the rental reversion will continue to increase to cover up the difference.

CRCT's NAV from Q2 $1.71 to $1.57, PB ratio is now 0.87. This is maybe due to depreciation of the RMB. Gearing at 35.7%, Interest cover 5.9x.

Vested @ $1.43

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StarhillGbl Reit FY2018/2019 Q1 Results

I was skeptical that the AEI can contribute much to the DPU. Q1 StarhillGbl Reit FY2018/201, DPU drop 4.2% to 1.15cents Y-on-Y. Some people mentioned that its an increase Q-on-Q. However, past years DPU shows that Q1 always give out higher DPU and Q4 the least. Hence we cannot compare Q-on-Q.

Upon facing more decline in DPU, StarhillGbl Reit also has more than 1/4 of its lease expiring in this new fiscal year. This is a huge amount of lease, tenant move out will be bad news. Keeping the rental reversion flat is also bad for shareholders.

StarhillGbl Reit performance has been bad for consecutive for the 3rd year. AEI doesn't improve the DPU. Huge expiring leases. Probably will avoid this reit, if I have to set a TP, base on a further decline of 4-5% this year,  with 10% MOS, it gives a TP of $0.575.

Heading Typo, should be all FY17/18

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