Mapletree Pan Asia Commercial Trust: Better post-Mapletree Anson divestment?

*This article originally appeared on mykayaplus.com

Needless to say, the market took it very positively.

Since the management already has a deck on the rationales, I will not repeat them, but rather add my analysis. You can find the deck at the link below.

Most of the proceeds will be to pare down debt levels. This will improve the leverage ratio, ICR and debt headroom.

This will help deliver a DPU accretion of 1.5% pro forma basis. If fewer proceeds are used for paring down debt, more can be distributed as divestment gains in the next payout. But that could also be at the mercy of higher interest expense.

How much actual divestment proceeds end up as a one-off extra distribution is still a question. I wouldn't bet too much on that. I would rather the full amount be used to pay down debt and to lower the leverage.

And with the divestment done at a low cap rate and 10% above independent valuation, there is nothing much to nitpick.

Mapletree Anson is no crown jewel when compared to VivoCity and MBC. It is at most mediocre, especially for a property situated in the CBD area.

Its total net property income of S$ 29.3 million per unit will be S$ 0.0055. So, the contribution loss is minuscule. NAV per unit will also stay flat.

I always like to see REIT acquisitions and divestments on a longer timeline, since it provides me with a time frame to gauge REIT management's performances and rationales.

Mapletree Anson's past 10 years' performances were nothing to shout out for. But back then there weren't any reasons to divest it, and there were periods when the divestment cap rates could have been higher.

I think, and don't quote me, Mapletree Anson became the collateral for the MNACT merger.

Overall, I am slightly positive about the divestment as it will help in deleveraging and improving other key REIT metrics of MPACT.

My only concern is that Gateway Plaza, Sandhill Plaza and the Japan properties are still seeing fair-value losses. It shouldn't move the needle too much, but it would still be a drag to MPACT overall. The rationale of the merger that MCT + MNACT is better together is still not bearing fruits from the promise back then.

I am pretty sure Festival Walk could be the 3rd crown jewel in the making, but there is still some uncertainty in the Hong Kong market. And with interest rates remaining in the peaking state, it is a long-term waiting game for MPACT to be fairly revalued per unit basis.

p.s. This is just one of the many free examples of how I analyze stocks and REITs for investment opportunities and build my case. On top of that, I utilize a foolproof blueprint to screen out good dividend stocks and REITs. If you are interested in learning how I do it, I humbly invite you to join my club!

DISCLAIMER
The information available in this article/report/analysis is for sharing and education purposes only. This is neither a recommendation to purchase or sell any of the shares, securities, or other instruments mentioned; nor can it be treated as professional advice to buy, sell or take a position in any shares, securities, or other instruments. If you need specific investment advice, please consult the relevant professional investment advice and/or for study or research only.

No warranty is made with respect to the accuracy, adequacy, reliability, suitability, applicability, or completeness of the information contained. The author disclaims any reward or responsibility for any gains or losses arising from the direct and indirect use & application of any contents of the article/report/written material