On the valuation front, net asset value as at Mar 31 fell by five cents y-o-y to $1.73 excluding DPU payout. Assets under management fell by $324.9 million or 2.1% y-o-y to $15.2 billion. The uplift in the Singapore portfolio of $278 million was not able to offset the $602 million decline in the overseas portfolio due partly to divestments.
Festival Walk’s NPI fell to $133.5 million in the year to Mar 31 from $148.8 million in the corresponding period last year. As at Mar 31, Festival Walk’s valuation was HK$20,700 billion, down 4.9%. However in SGD, the decline was a steeper 9.5% y-o-y.
Rental reversions for the year were varied. VivoCity recorded +14.1% and The Pinnacle Gangnam
recorded a +51.3% positive rental reversion. However Festival Walk’s reversion was a negative 10.8% with Gateway Plaza and Sandhill Plaza at a negative 21.3%.
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When asked about the outlook for China, Sharon Lim, CEO of MPACT’s manager said: “For China, we expect it to go down for this year. I do not feel that it's actually strengthening. We are trying our very best in terms of hanging to the tenants and trying different strategies, even fitting out certain areas, because fit out cost is not very expensive, (eg) basic furnishing costs, so that tenant can just take their bag in and start operating.I would think that that is the only way we can just hang on in China. The vacancy rate is very, very high. I think we won’t be too optimistic with you when it comes to China. We just try to hang on to occupancy and control our costs.”
AEIs are on the cards for Festival Walk. The lease renewal for the cinema comes up for renewal in 2027. “That's why we're actively looking at reconfiguring. Number one is to have a smaller cinema. The rest of the space will be subdivided,” Lim says.
When asked if Festival Walk is overvalued, Lim replies that the 4.9% y-o-y decline in valuation in HKD as at Mar 31 was done by third party valuers and is in line with other Hong Kong based retail property valuations which indicate a 4% to 9% y-o-y decline.
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“If you talk about investment appetite and whether whether this price is something that people will look at, most of the investors are still very careful pertaining to Hong Kong. I see investors very, very cautious on Hong Kong and China is topping it. The investment climate is not as strong in terms of the pool of investors ready to put more money into Hong Kong and China,” Lim cautions.
Aggregate leverage reduced to 36.5% as at Mar 31 and weighted average cost of debt lowered to 3.16%, both improving interest coverage ratio (ICR) to 3.2 times.
When asked on acquisitions, Lim replies: “We are very, very comfortable with our gearing. We'll continue to explore as long as it makes sense to the portfolio, but we'll be very careful in terms of certain countries. We will definitely avoid China for the time being. I think the weakness will still be continuing. Singapore looks like a good base, but in terms of transactions, it's very limited. We'll be careful in terms of overseas markets, in terms of acquisition.”
In October last year Mapletree Investments announced the redevelopment of Harbourfront Centre into a new 33-storey landmark buiding, pairing upscale retail with premium best-in-class office space with full-fledged amenities. The new building witll comprise 26 floors of Grade A office specifications (Levels 8 to 33) and five floors of engaging spaces for an experiential visit (Basement 2 to Level 3). The premium integrated development is flanked by VivoCity in the east, HarbourFront Towers One and Two and the new two-storey cruise and ferry terminal in the west. The terminal will commence its operations at the new premises next to the existing HarbourFront Centre around 2H2026, Mapletree announced.
Lim says MPACT is not taking a stake in the redevelopment. However, MPACT has a right of first refusal (ROFR) for the property. “When the time comes and it’s ready, we will reassess.”
In a first look at the results, DBS Group Research says MPACT is still in a “two-speed recovery”. DBS is watching out for interest cost savings from swap expiries, potential yield accretion on festival walk office divestment to pare down debt; and upcoming anchor tenant renewals overseas. During the briefing, a focus on occupancy was emphasised. DBS currently has a buy rating on MPACT with a target price of $1.65 but estimates are under review, it adds.
