Mapletree North Asia Commercial Trust settles with insurers for HK$334m over damage to Festival Walk mall

MAPLETREE North Asia Commercial Trust  Mapletree NAC Tr: RW0U +2.94%  has entered into a settlement agreement with insurers on the damage to its Festival Walk mall in Hong Kong' s Kowloon Tong during the protests in 2019. The total settlement amount agreed was HK$334.3 million (S$58.3 million).

This comprises HK$84.3 million for property damage and HK$250.0 million for revenue loss due to business interruption. Interim payments of HK$263 million have been received from the insurers to date, the manager said in a bourse filing on Wednesday (Nov 24).

The insurance settlement amount for revenue loss due to business interruption, net of applicable tax, is about S$36.4 million. About S$3.5 million, in excess over the distribution top-ups of S$32.9 million paid to unitholders in Q3 and Q4 FY19/20, will be distributed to unitholders as part of the semi-annual distribution for the period from Oct 1, 2021 to Mar 31, 2022.

The settlement amount for property damage is capital in nature and not distributable, the manager said.

Units for the trust closed at 2.94 per cent or S$0.03 higher on Wednesday (Nov 24) at S$1.05.

Anti-government demonstrators had smashed glass panels at the mall in November 2019 and set fire to the Christmas decorations, causing what was described as extensive damage.

 

Exclusive |  Coronavirus: Hong Kong leader Carrie Lam confirms gradual reopening of border with mainland China

 

• Gradual resumption of quarantine-free travel being discussed, but movement will initially be limited to within Guangdong province
• Arrangement to be implemented under quota system, with priority given to business exchanges, Lam tells the Post

uarantine-free travel between Hong Kong and mainland China may resume gradually as early as next month, the  Post  has learned, with Beijing confirming both sides have reached &ldquo significant consensus&rdquo over reopening their border.

&ldquo Both sides met each other halfway and the full reopening of the border is progressing in an orderly manner,&rdquo a spokesman for the State Council&rsquo s Hong Kong and Macau Affairs Office said on Thursday, hours after the  Post  reported the first phase would be limited to Guangdong province for Hong Kong travellers, with Shenzhen as the only entry point.

Chief Executive Carrie Lam Cheng Yuet-ngor separately confirmed the latest development in an interview with the  Post, stressing that the resumption of quarantine-free cross-border travel would be &ldquo gradual&rdquo .

&ldquo You cannot enjoy this quarantine-free travel directly to Beijing, or Shanghai. It&rsquo s logical because we start with the  Greater Bay Area,&rdquo she said.

 

 

The arrangements would be implemented under a quota system, she added, with priority given to business exchanges.

 

Asked whether the border would reopen by the end of the year, Lam said: &ldquo I hope very much so. But I just can&rsquo t promise it. We are still in discussion.&rdquo

 

 

 

 

 

02:07

Singapore adds 8 more countries to quarantine-free list for vaccinated travellers

 

Singapore adds 8 more countries to quarantine-free list for vaccinated travellers

In a press release issued at around the same time as the one by the affairs office, the Hong Kong government said local experts and officials met their mainland counterparts via video conferencing on Tuesday, noting that the exchange was &ldquo constructive&rdquo .

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According to a mainland health official familiar with the negotiations, Hong Kong travellers would have to display a green health code, issued by the city, indicating a low risk of  Covid-19  infection.

 

&ldquo Travellers from Hong Kong could go to other cities in Guangdong province after arriving in Shenzhen if they have valid health codes and meet other requirements, which are being finalised,&rdquo the insider said. &ldquo If the Hong Kong government manages a smooth roll-out of the system, we might see the first trial of such an arrangement in mid-December.&rdquo

 

Sources said officials and experts from both sides held discussions online in a bid to advance progress talks after the first meeting in Shenzhen on September 26, but no date has been finalised for the next round yet. Officials said on Thursday the latest conversation was &ldquo conducive&rdquo for a second meeting.

Pressure has been steadily mounting on Hong Kong authorities to work towards reopening the border, particularly from the many residents who have business and family ties on the mainland.

 

Hong Kong airport &lsquo plans passenger segregation&rsquo in bid for border reopening

4 Nov 2021

The chief executive said better contract-tracing ability and a higher vaccination rate would help Hong Kong convince mainland health experts to support the resumption of quarantine-free travel.

 

Having received two Sinovac jabs earlier, Lam revealed that she would take a booster shot next week and stick to the Chinese-made vaccine instead of taking the German-manufactured BioNTech alternative.

&ldquo There is a myth about a high count of antibodies. My doctor told me it&rsquo s not the higher the count of antibodies, the better, but whether there are enough,&rdquo she said.

 

Health authorities on Thursday confirmed seven new coronavirus infections, all imported, taking the official case tally to 12,359, with 213 related deaths. Among the fresh cases were two sea crew members from India and a domestic helper from Indonesia. The rest arrived from Pakistan and Nepal.

According to a mainland health official familiar with the talks, another online meeting is expected to be held next week to iron out the details of a tracking mechanism for travellers from Hong Kong, and the classification of their coronavirus risk levels.

 

Discussions were also continuing on criteria for suspending the mechanism should the need arise.

Those suspected of having Covid-19 or who have tested positive, the patients&rsquo close contacts, their close contacts and people undergoing quarantine would be issued a &ldquo red code&rdquo , meaning there is a high risk of infection and they would not be eligible for the scheme.

 

People living in the same building or vicinity as a confirmed case would be issued a &ldquo yellow code&rdquo and would also not be allowed to participate.

 

On the mainland, Guangdong residents returning from cities with areas where the National Health Commission deems the Covid-19 risk high or moderate are assigned the same colour code.

One of the requirements is that people crossing the border must use a contact-tracing app that gives mainland authorities the ability to track their movements.

Joe Chau Kwok-ming, president of the Hong Kong General Chamber of Small and Medium Business, welcomed news of the scheme, noting tens of thousands of company owners had been unable to visit their factories or offices across the border for the past 21 months.

&ldquo It is a breakthrough,&rdquo he said of the negotiations. &ldquo We will evaluate what the requirements are and the development of the Covid-19 outbreak on the mainland before making a decision on whether to travel to China.&rdquo

 

China&rsquo s Delta outbreak spreads to two more provinces, with 87 new cases

4 Nov 2021

Howard Kwok, co-founder of wine trading start-up StockVins, said the company&rsquo s largest shareholder and founder would visit Guangzhou as soon as the border reopened, after its senior executives were unable to travel in person to deal with a series of human resources issues at its mainland offices.

Management could not afford to spend 21 days in compulsory quarantine because of the overwhelming workload in Hong Kong, he added.

&ldquo We have waited for more than a year to cross the border, but all the crucial human resources matters cannot be resolved until we travel to Guangzhou in person,&rdquo he said. &ldquo We are desperate to cross the border.&rdquo

Kwok said executives would not mind using any contact-tracing app and would meet other criteria to be eligible for the scheme.

Sze Lai-shan, deputy director of the Society for Community Organisation, said she understood that many people who had family on the mainland would not really mind where they crossed the border, though some were used to taking direct buses from Hong Kong&rsquo s city centre to other parts of Guangdong before the pandemic struck.

&ldquo Now they will still take other ways to transit at Shenzhen. Having the option of quarantine-free travel is still better than nothing,&rdquo Sze said.

She estimated opening up Guangdong province would cover the travel needs of about 50 to 60 per cent of Hong Kong families with mainland ties.

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CGS-CIMB reiterates ' add' for Mapletree North Asia Commercial Trust towards a more stable 2H​

 

CGS-CIMB reiterates ' add' for Mapletree North Asia Commercial Trust towards a more stable 2H

CGS-CIMB Research analysts Lock Mun Yee and Eing Kar Mei have maintained their &lsquo add&rsquo rating for  Mapletree North Asia Commercial Trust (MNACT), with an unchanged target price of $1.12.

Lock and Eing have also kept their distribution per unit (DPU) estimates for the FY2022 and FY2024 unchanged.

In an Oct 29 note, the analysts say MNACT is trading at an inexpensive 6.8% FY2022 DPU yield and much of the weak retail outlook at Festival Walk has been factored into the current share price. 

In the 1HFY2022, MNACT reported gross revenue and net property income (NPI) of $215.4 million and $161.9 million respectively, 13.1% and 15.8% higher y-o-y. This is due to lower rental relief of $4.7 million granted to retail tenants at Festival Walk, contributions from Hewlett-Packard Japan headquarters as well as a stronger Renminbi. 

The figures were partly offset by lower average rental rates at Festival Walk and Gateway Plaza as well as a weaker Hong Kong dollar. This led to a higher NPI margin of 75.1% for 1HFY3/22, the analysts highlight.   

Distributable income grew 19.1% y-o-y at $119.5 million, translating to a DPU of 3.426 cents. Portfolio occupancy ticked up slightly q-o-q to 97.9%. 

In terms of balance sheet, MNACT&rsquo s gearing stood at 41.4% at end-1HFY22, with interest cover of 4.1 times, while effective interest cost declined h-o-h to 1.84%.

Gross revenue at Festival Walk grew 21.4% y-o-y to $106.6 million, while NPI grew a higher 26.1% y-o-y, boosted by lower rent reliefs. Retail sales and shopper traffic at Festival Walk expanded 22% and 29% respectively y-o-y, in tandem with overall improvements in Hong Kong&rsquo s retail sales. 

While occupancy remained fairly stable at 99.9%, leasing conditions were soft as retailers remained cautious on outlook, say Lock and Eing. MNACT reported a 30% decline in rental reversion in 1H. 

The company has a remaining 5% of portfolio gross rental income coming from Festival Walk&rsquo s lease expiries for 2HFY3/22F. MNACT expects the quantum of negative reversions for 2HFY22F to remain similar to that of 1H. 

The analysts add that interior recovery works at Festival Walk have been completed and exterior works are being carried out progressively and are expected to complete by end-2021.

Meanwhile, Gateway Plaza saw higher occupancy of 95.4% but recorded a negative reversion of 24%. Looking ahead, with ample incoming supply, the analysts think the weak outlook is likely to continue to drag on upcoming lease renewals. 

&ldquo MNACT also indicated that one of the major tenants at Gateway Plaza, whose current lease is due to expire by Dec 2022, has extended its lease in advance by another year. Meanwhile, Sandhill Plaza and the Japan portfolio continue to be steady performers, delivering a 5% and 1% rental reversion and stable occupancy of 99.7% and 87.8% respectively. 

&ldquo The Pinnacle Gangnam reported a 58% rental reversion on renewal of one lease and management guided that rental reversions are likely to remain healthy. MNACT has another 1.2% of leases in Japan and Seoul to be re-contracted in 2HFY22F,&rdquo the analysts add. 

CGS-CIMB&rsquo s target price for MNACT is $1.12, presenting a 12.3% upside. 

 

Mapletree North Asia Commercial Trust (SGX: RW0U)

The largest REIT listing in Singapore raising over US$1.4 billion, MNACT (SGX: RW0U) was listed in 2013. A diversified REIT with holdings in both retail and office, MNACT provides investors exposure to prime properties in China, Hong Kong, Japan, and South Korea.

In the first half of 2021, we can see MNACT gradual recovery as China, Hong Kong, Japan, and South Korea COVID-19 situation improved. Lesser rental relief was given out to tenants this year due to the festive seasons in the first half of the year that boosted sales.

The strongest performing REIT in the Mapletree family, Mapletree NAC delivered a total return of 7.22% in 1H21. Currently, MNACT distributes its dividend semi-annually.

At current share price of $1.02, MNACT current total market capitalisation is at $3.55 billion.

 

DBS Group Research has kept &ldquo buy&rdquo on MAPLETREE NACT  with a higher target price of $1.30 from $1.20 as the REIT&rsquo s unit price looks set to re-rate.