MAPLETREE COMMERCIAL TRUST (SGX:N2IU)
Mapletree Commercial Trust - Creating An ‘MPACT’
Merger with MNACT for diversification, growth
- Mapletree Commercial Trust (SGX:N2IU) and Mapletree North Asia Commercial Trust (MNACT, SGX:RW0U) have proposed to merge via a S$4.2b trust scheme of arrangement. The entity to be renamed Mapletree Pan Asia Commercial Trust (MPACT) will become the 7th largest Pan Asian REIT, and 3rd largest S-REIT, with a S$10.5b market cap and a S$17.1b AUM across Singapore, China, HK, Japan and South Korea.
- Beyond the strong financial accretion, we see strategic merits from increased AUM diversification, stronger DPU growth, and potentially lower cost of capital.
- With likely risk of investor following waning due to a diluted Singapore pure-play thesis, execution will remain key, and management of the new REIT will need to prove it can deliver on an expanded growth mandate.
- We maintain our forecasts and target price for Mapletree Commercial Trust pending deal closure. Maintain BUY.
Strong financial accretion
- The deal will see Mapletree Commercial Trust acquiring all Mapletree North Asia Commercial Trust units in exchange for:
- cash-and-scrip (16% cash, 84% new Mapletree Commercial Trust units) or
- scrip-only (100% new Mapletree Commercial Trust units).
- It values Mapletree North Asia Commercial Trust at S$1.1949/unit (~8% premium to last close, ~17% above 12-month VWAP), implying a gross exchange ratio of 0.5963x. Pro-forma DPU/NAV accretion for Mapletree Commercial Trust is estimated at 7.5-8.9%/6.5-7.1%, with gearing rising from 33.7% to 39.2%. Mapletree Investments (MPIL), sponsor of both REITs, is sweetening the deal by waiving its acquisition fees, electing to receive scrip-only, and pegging the new management fee structure to distributable income and DPU growth.
- The merger is subject to an EGM by mid-Apr 2022, and if successful, would see Mapletree North Asia Commercial Trust delisted.
Strategic positives from the deal
- We see 1.5x and raise its MSCI Singapore index weighting from 1.6% to 2.4%, leading to increased investor attention and potentially an improved cost of capital.
Singapore pure-play thesis to wane, execution is key
- Mapletree Commercial Trust has executed well to achieve a office acquisitions with its enlarged Pan Asian mandate.
- See
- See also
- Mapletree North Asia Commercial Trust Share Price,
- Mapletree North Asia Commercial Trust Target Price,
- Mapletree North Asia Commercial Trust Analyst Reports,
- Mapletree North Asia Commercial Trust Dividend History,
- Mapletree North Asia Commercial Trust Announcements,
- Mapletree North Asia Commercial Trust Latest News.
Chua Su Tye
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2022-01-03
SGX Stock
Analyst Report
2.350
SAME
2.350
