Mapletree Pan Asia Commercial Trust grapples with China property issues
Singapore-listed Mapletree Pan Asia Commercial Trust (MPACT) reported a 3.5% decline in Q2 distribution per unit, as its CEO described China assets as "our biggest pain."
China Assets Weigh on Performance
Mapletree Pan Asia Commercial Trust (MPACT) recorded a 3.5 per cent fall in its distribution per unit (DPU) for the second quarter ended September, reaching S$0.0194 from S$0.0201 a year earlier. This dip primarily stemmed from weaker contributions from its international portfolio and the absence of income from previously divested assets.
Sharon Lim, CEO of the real estate investment trust's (REIT) manager, stated that China remains "our biggest pain," acknowledging anticipated continued pressure on these properties over the coming year.
Divestment Hurdles and Market Oversupply
MPACT's two China properties, Gateway Plaza in Beijing and Sandhill Plaza in Shanghai, contributed S$26 million in net property income (NPI) for the first half ended September, a 15.9 per cent decrease from S$30.9 million previously. Rental reversion for these assets was negative 29.9 per cent for the period.
The manager noted that new supply has outpaced demand in both cities, with Beijing office rents falling 4.1 per cent in Q3 2026 and Shanghai business park rents dropping 1 per cent. Valuations for Gateway Plaza and Sandhill Plaza also declined by 8.5 per cent and 4.7 per cent respectively as of end-March 2026.
Singapore Stabilises, Japan Shows Mixed Signals
Despite the challenges, MPACT's Singapore assets, particularly VivoCity mall, provided a buffer, accounting for 61 per cent of the REIT's S$15.3 billion assets under management (AUM) and 68 per cent of NPI in the first half. VivoCity achieved positive rental reversions of 15 per cent and maintained full occupancy, with tenant sales growing 4.1 per cent year-on-year.
In Japan, committed occupancy across MPACT’s seven properties stood at 57.5 per cent as at end-September, down from 73.9 per cent a year earlier. However, the manager observes increasing leasing inquiries in Makuhari for larger spaces, as companies consider lower-cost alternatives to central Tokyo.
Navigating Future Strategy
The REIT has divested approximately S$1.2 billion in properties over the past two years, but current market conditions, marked by higher financing costs and reduced buyer interest, complicate further sales. MPACT's CEO indicated a preference to retain assets rather than accept significant price reductions.
The manager will focus on enhancing property performance and exploring divestment opportunities without committing to fixed timelines. For investors, this suggests continued efforts to optimise existing assets, with Singapore's retail sector expected to remain a key earnings driver amidst a cautious approach to asset recycling in challenging markets.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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