Value Unlocked with Mapletree Commercial Trust Proposed Acquistion of MBC II

Mapletree Commercial Trust current own VivoCity, Mapletree Business City I (“MBC I”), PSA Building, Mapletree Anson, Bank of Amercia Merrill Lynch HarbourFront (“MLHF”) in its portfolio.

This is one piece of news investors of Mapletree Commercial Trust has been waiting for. On 27th September 2019, Mapletree Commercial Trust has proposed the acquisition of Mapletree Business City (“Phase 2”). Since its IPO in 2011 to the current 2019, Net Property Income has increased from S$124 million to S$347.6 million. Distribution Per Unit (“DPU”) has increased from 5.271 cents to 9.14 cents.

There are various reasons or rationale the manager has provided behind the acquisition such as owning the workplace of the future, asset class provides steady rental growth at low volatility, stable cashflows with embedded rental growth from high quality tenants, further enhances Mapletree Commercial Trust portfolio and attractive valuation and NPI, DPU and NAV accretive etc. I wanted to highlight the point that with the acquisition, Mapletree Commercial Trust has basically gain control over the Alexandra Precinct!

Now, here comes the most important part. With the acquistion, value is expected to be unlocked! Net Property Income (“NPI”) yield is estimated to increase from 4.7% to 5.0%. Distribution Per Unit is estimated to increase from 9.14 cents to 9.51 cents. Net Asset Value per unit is estimated to increase from 1.71 cents to 1.74 cents.

Lastly, the acquistion will be funded by debt and equity. The manager has proposed the issue of up to 500.0 million new units. Investors can expect

  • A private placement of New Units to institutional and other investors; and / or
  • A non-renounceable preferential offering of New Units to the existing unitholders of MCT on a pro rata basis

The EGM is to be held on 15 October 2019 (Tuesday) at 3.30 p.m.

I am looking forward to the preferential offering!