• Remain bullish on Mapletree Commercial Trust and believe its best-in-class portfolio (VivoCity, MBC I and MBC II) will enable the REIT to weather the storm.
• VivoCity, a dominant mall in the Greater Southern Waterfront, will remain a desired mall for retailers post COVID-19.
• Less impacted by new bill with generous upfront support of 2.5 months (1.5 months out-of-pocket).

Maintain BUY on Mapletree Commercial Trust; Lower Target Price to S$1.90

• We maintain our BUY call on Mapletree Commercial Trust (SGX:N2IU) and raised our Target Price to S$2.25 from S$1.90. Even though the COVID-19 outbreak will continue to impact VivoCity, we believe Mapletree Commercial Trust’s earnings will be supported by its prized assets, MBC I and MBC II, with their stable earnings and strong tenant profile.
• Mapletree Commercial Trust is currently trading at attractive valuations post earnings revision at FY21F dividend yield of 4.6% and P/NAV of 1.1x, close to -1SD.

Where We Differ: Best-in-class Portfolio to Weather the Storm

• Despite the direct impact on VivoCity from the COVID-19 outbreak and restrictions on movement, we remain bullish on Mapletree Commercial Trust and believe that its best-in-class portfolio will enable the REIT to weather the storm. In addition, FY21 will be boosted by full-year contribution from MBC II.
• Mapletree Commercial Trust also enjoys a scarcity premium as one of only two 100%-Singapore-focused large-cap REITs which is highly valued by investors.

VivoCity a Dominant Mall Heading Towards Recovery

• We believe Mapletree Commercial Trust is less impacted by the new rental waiver bill as it was one of the few that gave generous upfront support of 2.5 months (1.5 months out-of-pocket) of rental waivers. These amounts had been sufficiently retained in 4QFY20. In addition, we believe VivoCity, as a key destination mall in the Greater Southern Waterfront, will remain a desired mall for retailers post COVID-19.

Singapore Retail REITs

• Frasers Centrepoint Trust - DBS Research 2020-05-29: Suburban Giants To Lead Retail Recovery.
• Lendlease Global Commercial REIT - DBS Research 2020-05-06: Steering Steady Amidst The COVID Storm.
• Mapletree Commercial Trust - DBS Research 2020-05-29: The Flower That Blooms In Adversity.
• SPH REIT - DBS Research 2020-05-29: It Pays To Be Prudent
• Starhill Global REIT - DBS Research 2020-05-29: Slowly But Surely.

Source: DBS Research - 29 May 2020