MCT – BT

MapletreeCom rated Baa2 by Moody’s

Provisional rating comes with ‘stable’ outlook; trust’s key asset is VivoCity

MOODY’S Investors Service has assigned a provisional Baa2 rating to Mapletree Commercial Trust (MCT). The outlook for the rating is stable, the agency said.

The rating is based on MCT’s stable and recurring income from its investment property portfolio, Moody’s said.

The trust’s initial portfolio comprises three properties, of which the ‘key asset’, VivoCity, accounts for over 70 per cent of the portfolio by income and value.

‘VivoCity is a prize asset. It is a very busy, family destination-cum-retail and leisure mall, located over the HarbourFront MRT Station,’ said Alan Greene, a Moody’s vice-president and senior credit officer.

‘In addition to footfall generated by the resident Singaporean population, VivoCity is at the gateway to Sentosa, and so benefits from the large tourist numbers drawn to Sentosa’s numerous attractions and casino,’ added Mr Greene, who is also Moody’s lead analyst for MCT.

The other two properties – the Bank of America Merrill Lynch HarbourFront and PSA Building office buildings – are fringe area office buildings.

‘Compared with VivoCity, the initial two office properties are relatively modest. However, one is leased to a single tenant until 2017, with built-in triennial rent increases, while rental income from the other building (PSA Building) will benefit later this year once its adjacent retail centre is completed,’ noted Mr Greene.

Based on the properties available under the right of first refusal agreements with sponsor Mapletree Investments, the proportion of income derived from offices will increase over time and may exceed that from retail properties, Moody’s noted.

The agency’s rating for MCT is currently constrained by concentration risk, but this concern is expected to decline with the asset enhancement activities underway and with the potential injection of pipeline properties acquired from the sponsor.