SINGAPORE (Jan 30): OCBC Investment Research continues to rate Mapletree North Asia Commercial Trust (MNACT) at “buy” with a higher fair value estimate of $1.35 compared to $1.34 previously.

To recap, the trust’s manager last week posted a 3.2% higher 3Q DPU of 1.927 cents even as net property income (NPI) growth was partially offset by higher finance costs, management fees and an enlarged unit base.

OCBC deems this as a firm set of results and in line with expectations, with NPI for 9MFY19 forming 75.2% of its full-year forecasts.

In a Tuesday report, analyst Andy Wong says he continues to like MNACT for its resilient portfolio with near-full occupancy at 99.7% and positive rental reversions.

This comes despite some softness in tenant sales, especially at Festival Walk due to market uncertainties and a softer residential property market.

Nonetheless, Wong says occupancy cost for Festival Walk remains healthy at 19.4%, which is marginally lower than from 19.5% from the previous quarter.

He also believes MNACT is still trading at a healthy yield as at $1.25 at the close of Monday, which implies a FY19F and FY20F distribution yield of 6.1%.

“In terms of financial position, MNACT’s gearing ratio remained stable at 39 %. MNACT has hedged 85% of its debt (+7 ppt q-o-q), while ~82% of its estimated FY19 distributable income has been hedged into SGD,” says Wong.

Units in MNACT were trading 1 cent lower at $1.23, or a FY19F distribution yield of 6%, prior to the midday trading break.