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I don' t mind if the price doesn' t revisit $1.79 since I am holding MCT for long term. Just a pity that couldn' t buy more when it was $1.79 due to lack of cash at that time. I believe in the management and the sponsor. With Dyson now ocupying St James Power House long term, this asset could also be injected into MCT in the future. Maybe Mapletree can also integrate HabourFront better into Vivo and with Greater Water Front blue print in place, I am sure MCT is in prime position to grow.
PhillipTan ( Date: 28-Mar-2022 02:02) Posted:
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Mapletree' s support for MCT-MNACT merger may raise expectations of other Reit sponsors
The sponsor is essentially making a cash offer for MNACT and injecting it into MCT for new units priced at a premium
WHEN Mapletree Commercial Trust (MCT) and Ma-pletree North Asia Commercial Trust (MNACT) unveiled plans to merge 3 months ago, this column asserted the deal only made sense from the perspective of their sponsor Mapletree Investments.
This past week, Mapletree Investments - which is a privately held unit of Temasek Holdings - doubled down on its support for the deal by agreeing to stump up as much as S$2.2 billion in cash in order to mollify disgruntled unit-holders of MNACT and MCT.
This move has probably increased the likelihood of the merger succeeding, but it might result in investors expecting more of the sponsors of other real estate investment trusts (Reits) pursuing similar deals.
It could also lead to calls for active intervention by sponsors in repositioning Reits that fail to garner decent market valuations or deliver high enough returns.
Under the terms of the merger, first announced on Dec 31, unitholders of MNACT are to receive a consideration of S$1.1949 per unit - which is equivalent to the Reit' s adjusted net asset value (NAV) as at Sep 30, 2021.
Unitholders of MNACT can elect to receive this consideration in the form of 0.5963 of a new MCT unit priced at S$2.0039 or 0.5009 of a new MCT unit priced at S$2.0039 plus S$0.1912 in cash.
The merger was presented as an initiative of the managers of the 2 Reits, though the deal plainly had the support of their sponsor - in particular, Mapletree Investments provided an undertaking to accept the scrip-only consideration for its stake in MNACT.
On Mar 21 - in the wake of mounting investor resistance to the merger - the managers of MCT and MNACT announced that unitholders of MNACT will be given the further option of receiving the consideration of S$1.1949 per unit entirely in cash.
MCT will raise the additional S$2.2 billion of cash required for this third consideration option through a preferential offering of up to 1,094 million new units priced at S$2.0039 each.
To make it all work, Mapletree Investments has provided an undertaking to subscribe for MCT' s entire S$2.2 billion preferential offering. Following the merger and preferential offering, Mapletree Investments' stake in MCT will rise from 32.61 per cent to as much as 57.09 per cent.
Notable precedent
For investors, the S$2.2 billion commitment from Mapletree Investments has put a new complexion on the merger.
For starters, the all-cash consideration option has set a floor market price for MNACT units.
Meanwhile, Mapletree Investments' commitment to fully back MCT' s preferential offering means the enlarged MCT will be spared any incremental debt financing as a result of the all-cash consideration.
Just before the all-cash consideration option was announced, MCT had closed at S$1.89 - which was 5.7 per cent below the S$2.0039 at which its units are being valued under the merger.
Reflecting MCT' s sagging market price, MNACT closed at S$1.12 - which was 6.3 per cent below the S$1.1949 at which its units are being valued under the merger.
Since the all-cash consideration option was unveiled, the market price of MNACT units has jumped 9.8 per cent while the market value of MCT units has held steady.
It seems very likely that Mapletree Investments' support for the merger of MCT and MNACT will be cited as a notable precedent when similar deals are proposed in the future.
Unitholders of target Reits are bound to demand an all-cash consideration option in order to protect themselves from being paid in overvalued units of the acquiring Reit.
Indeed, the support Mapletree Investments has demonstrated may also inform investor expectations on the role sponsors can play in repositioning their struggling Reits.
The all-cash consideration for MNACT units, combined with Mapletree Investments' backing of MCT' s S$2.2 billion preferential offering, is akin to the sponsor making a cash offer for MNACT and then injecting it into MCT in exchange for new units priced at a premium.
Is it too much to ask that the sponsors of other Reits struggling to trade above their NAVs - including CapitaLand China Trust, Keppel Pacific Oak US Reit and Sabana Industrial Trust - consider taking them private in order to reposition and enhance their portfolios before bringing them back to market?
What' s next?
While the all-cash consideration might have appeased disgruntled unitholders of MNACT, it could be as long as 2 months before unitholders of MCT and MNACT actually vote on the proposed merger.
This is arguably a very long time in the market, given the post-pandemic reopening, shifting inflation trends and geopolitical uncertainty.
In order to ensure the merger ultimately succeeds, the manager of MCT needs to build stronger investor support for the Reit by explaining exactly how its growth will be enhanced after subsuming MNACT.
The manager of MCT has already said that it is stabilising and improving the performance of Festival Walk in Hong Kong considering selective divestments in Japan and looking for opportunities to expand in South Korea.
In China, the manager of MCT is trying to keep occupancy levels up while hunting for opportunities to acquire more offices and business parks.
Back in Singapore, the manager of MCT is looking into acquiring additional assets from its sponsor to entrench its position in the Greater Southern Waterfront area.
More than anything else, setting the market price of its units on a gradually rising trajectory - such that it begins pulling MNACT higher too - is probably the most effective way for the manager of MCT to ensure that its unitholders, as well as unitholders of MNACT, vote for the merger when the time comes.
Seems unlikely to go to 1.79 for now
You will have better luck at 1.89 lol
You will have better luck at 1.89 lol
HVRRVH ( Date: 25-Mar-2022 18:14) Posted:
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Now I got some fund, but the price no longer $1.79 (that time no fund). So I will wait.
hehe I never subscribed to BusinessTime .... :P
moonsun ( Date: 25-Mar-2022 10:07) Posted:
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Sgx & MAS is seriously under resourced I think. Many cases of ipt and conflict of interest etc are not being dealed with promptly.. think you go read letter at businesstime by one guy from remiser society and u can understand better..
Gd luck if you believe in fairness
Gd luck if you believe in fairness
JustOnce ( Date: 25-Mar-2022 09:25) Posted:
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Any real life expert (not hear-say or coffee shop or rumour) in here actually are iin the trade or related trade/profession that can share what is the due dilligence or check and balance involved in this type of merger where both REITs belong to the same sponsor? I would have thought transaction should be at arms lenght and be independently assessed that there is no funny business right? Surely they cannot just use one REIT to to subsidize another.
If the sponsor is willing to pay S$2.0039 to buy our MNACT with MCT trading at 1.90. I can only think of two reasons, one is logical and the other would be in the conspiracy theory arena
(1) the sponsor have such strong believe the combined entity will trade higher than $2.
(2) the sponsor sees a significant downside to MNACT and the downside is more than the downside of MCT P& L post merger.
any other reasons?
If the sponsor is willing to pay S$2.0039 to buy our MNACT with MCT trading at 1.90. I can only think of two reasons, one is logical and the other would be in the conspiracy theory arena
(1) the sponsor have such strong believe the combined entity will trade higher than $2.
(2) the sponsor sees a significant downside to MNACT and the downside is more than the downside of MCT P& L post merger.
any other reasons?
Ya, I'm having a hard time on deciding which option to choose...
johnwongzz ( Date: 22-Mar-2022 21:14) Posted:
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MNACT shareholders are now thinking whether they shd switch to MCT now so that they can benefit from the upside when HK reopens 
@ Lukewong82
When the merger news broke, it was a double whammy for Mapletree. MNACT' s unitholders not happy as they think the offer was low ball, even though the market price has not been moving since Covid. MCT' s unitholders also not happy because apparently, many bought into MCT for its pure SG assets. Consequently, both MNACT and MCT prices kept dropping until recently. Personally, as both MCT and MNACT units holder, I am neutral and don' t mind the merger, especially I am of the veiw that pure SG reit may not have too many room to grow compare to those reits that also have overseas mandate. I also don' t know why people/market now appear to be happier with option 3. Perhaps they can collect cash and don' t have to risk owning MCT. I don' t know why MCT holders are happier now, as you said, MCT still take in MNACT' s assets anyway. Perhpas they like the confidence show by the sponsor? And they may be some unit holders like me who believe in the long term prospect of the combined entitity. I am sure the sponsor won' t stop at the current merger, they will contiue to grow the reit and aim for increasing DPU, since they have alighed their management fee with growing of DPU too.
When the merger news broke, it was a double whammy for Mapletree. MNACT' s unitholders not happy as they think the offer was low ball, even though the market price has not been moving since Covid. MCT' s unitholders also not happy because apparently, many bought into MCT for its pure SG assets. Consequently, both MNACT and MCT prices kept dropping until recently. Personally, as both MCT and MNACT units holder, I am neutral and don' t mind the merger, especially I am of the veiw that pure SG reit may not have too many room to grow compare to those reits that also have overseas mandate. I also don' t know why people/market now appear to be happier with option 3. Perhaps they can collect cash and don' t have to risk owning MCT. I don' t know why MCT holders are happier now, as you said, MCT still take in MNACT' s assets anyway. Perhpas they like the confidence show by the sponsor? And they may be some unit holders like me who believe in the long term prospect of the combined entitity. I am sure the sponsor won' t stop at the current merger, they will contiue to grow the reit and aim for increasing DPU, since they have alighed their management fee with growing of DPU too.
johnwongzz ( Date: 22-Mar-2022 18:34) Posted:
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MNACT assets are actually pretty prime.. Kowloon Tong MTR is always super busy with people coming in and out from the shenzhen border and there are always alot of students and nearby residents at Festival Walk eating, spending money.. the shopping crowd there is usually 3-4x of vivocity cos HK is so much denser compared to SG.
every country will open up in 2H this year given how mild omicron is..
there' s a video by Quarz on why they wanted to vote down the earlier offer cos of the strong potential in 2022 and the increase in weight of index inclusion of MNACT
https://www.youtube.com/watch?v=1LvyUvAYCpU
Temasek must know the asset well hence so confident to pour $2billion in at S$2
huat ah!!!
every country will open up in 2H this year given how mild omicron is..
there' s a video by Quarz on why they wanted to vote down the earlier offer cos of the strong potential in 2022 and the increase in weight of index inclusion of MNACT
https://www.youtube.com/watch?v=1LvyUvAYCpU
Temasek must know the asset well hence so confident to pour $2billion in at S$2
huat ah!!!
By the way can i ask a question? Why so many ppl so happy about the latest cash for MNACT? No doubt the sponsor is using their own $$ to buy over MNACT assuming no one will subscribe to the MCT preference shares offer of $2+ as the price is higher than market price of around $1.87.
BUT now the number of issued shares will increased with sponsor holding more than 50% of the total issued shares. So MNACT merging with MCT, still means the lousy assets of MNACT still end up in MCT right and now the number of issued shares expanded.
So if MNACT assets delivers lousy results and the profit distributable drops coupled with the enlarged shares means the DPU will drop too ...
So why is everyone so happy har? the lousy assets of MNACT still end up with MCT ma..???
Can anyone explains to me?
BUT now the number of issued shares will increased with sponsor holding more than 50% of the total issued shares. So MNACT merging with MCT, still means the lousy assets of MNACT still end up in MCT right and now the number of issued shares expanded.
So if MNACT assets delivers lousy results and the profit distributable drops coupled with the enlarged shares means the DPU will drop too ...
So why is everyone so happy har? the lousy assets of MNACT still end up with MCT ma..???
Can anyone explains to me?
HVRRVH ( Date: 22-Mar-2022 17:35) Posted:
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Insightful analysis:
https://financialhorse.com/mct-all-cash-offer-for-mnact-why-i-love-the-new-merger/
i read it the same way too. it seems tat they feel it will be abv $2.
plus divdend coming.. my friend & me went ti n to accumulate some...
dyodd
plus divdend coming.. my friend & me went ti n to accumulate some...
dyodd
HVRRVH ( Date: 22-Mar-2022 17:35) Posted:
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Nobody will subscribe to the PO at $2.0039 if the market price doesn?t hit anywhere near it. Effectively the sponsor is saying I alone will buy over MNACT and assimilate it with MCT. This sponsor has incredible confidence in what it is doing. Are they saying MCT, or the combined entity, will worth more than $2.0039 eventually? I have let go my MNACT and waiting to buy more MCT.
MNACT unitholders appeased by all-cash option of S$1.1949 per unit in proposed merger with MCT
MCT to make preferential offering of S$2.0039 per unit to fund the additional cash requirement of up to S$2.2b
THE managers of Mapletree Commercial Trust : N2IU +0.53% (MCT) and Mapletree North Asia Commercial Trust : RW0U +8.93% (MNACT) are now offering MNACT unitholders the option to receive the entire scheme consideration of their proposed merger, of S$1.1949 per unit, wholly in cash.
MCT will also make a preferential offering of S$2.0039 per unit to fund the additional cash of up to S$2.2 billion required in the new cash-only option.
MNACT and MCT had in December proposed a merger of both real estate investment trusts (Reits), a move that has been criticised by unitholders on both sides and questioned by the Securities Investors Association (Singapore) (Sias).
Previously, the proposed trust scheme would see MNACT unitholders receive a scheme consideration of S$1.1949 for each MNACT unit held - either in the form of 0.5963 new MCT units at an issue price of S$2.0039 each, or a combination of 0.5009 consideration units and S$0.1912 in cash.
The new cash-only consideration will provide MNACT unitholders " greater flexibility to elect the form of scheme consideration that is most suited to their investment needs" , the managers said in a joint statement on Monday (Mar 21).
The value of the scheme consideration remains unchanged at S$1.1949 per MNACT unit.
The all-cash option comes days after activist fund manager Quarz Capital Management late last week sought the intervention of the Monetary Authority of Singapore (MAS) to ensure that the manager of MNACT fulfils its fiduciary duty to its unitholders.
Quarz argued that the deal undervalues MNACT' s assets, and questioned whether the manager of MNACT would have recommended to sell the Reit at the same value if the merger talks were not with related party MCT but with a third party.
" The cash offer is fair and a win-win for all parties," Quarz said in response to queries from The Business Times (BT). It added that it supports the merger and looks forward to being a long-term unitholder of the enlarged entity.
" The merger provides a successful platform that MCT can leverage on to undertake attractive and accretive acquisitions in Asia Pacific," Quarz said. " We thank the Mapletree manager and sponsor for taking prompt actions in addressing the concerns of unitholders with regard to the proposed merger."
Quarz was not the only group to question the merger. In February, Sias asked the Reit managers why the proposed merger was necessary, given that there are " no apparent operational synergies" between them. MCT' s manager said the merger was to bring about long-term sustainable growth for MCT.
In response to queries from BT, MAS said that it " closely monitors corporate actions undertaken by Reits, and will take appropriate follow-up action where there are areas of supervisory concern" .
" When presented with a merger proposal, the offeree Reit manager and its directors have the responsibility to properly evaluate the proposed terms, and to carefully assess all relevant factors in deciding whether to support and present the proposal to unitholders," the MAS spokesperson said.
" It is also incumbent on them, when presenting the merger proposal to unitholders, to explain clearly how they had arrived at their assessment to support the merger proposal," the spokesperson added.
The Reit managers noted that the decision to include the cash-only consideration came after a request from the MNACT manager amid prevailing market conditions and feedback from MNACT unitholders. The managers added that typically takes in comments from all unitholders, and not just feedback from individual investors.
" We have obviously been monitoring the market," said Cindy Chow, chief executive officer of MNACT' s manager, at a briefing following the announcement. " We thought it was appropriate and timely to make the request to the MCT manager for them to review the terms and also to consider an all-cash option for our MNACT unitholders.
" Eventually, we came to a conclusion and agreed between both parties that this was a suitable option to be offered to MNACT unitholders. It certainly does give a higher certainty to our unitholders and also gives them the flexibility to elect the form of the scheme consideration that is most suited to their investment needs."
Sharon Lim, chief executive officer of the MCT manager, said the Reit remains " very committed" and " believes very strongly" in the rationale and financial benefits of the merger.
" The cash-only option is only possible to be offered on a table with the backing of sponsor Mapletree Investments, who will undertake to pick up the maximum number (of) units under the preferential offering, which is our source of funding for the all-cash option," Lim added.
Post-merger, the merged entity will be managed by the MCT manager. Lim will continue to lead the Reit manager following the completion of the merger.
To fund the additional cash requirement of up to S$2.2 billion, MCT will make a preferential offering of up to 1.09 billion units at S$2.0039 each, which is the same as the scheme issue price of each consideration unit, to its unitholders.
The offer price represents a 6.3 per cent premium to the volume weighted average price of S$1.8843 per MCT unit for all trades done on Mar 18, being the preceding market day up to the offer announcement.
Mapletree Investments, the sponsor of both MCT and MNACT, has provided an undertaking to subscribe up to S$2.2 billion in the preferential offering at the issue price.
It also agreed to a 6-month lock-up of its unitholdings in the merged entity upon the completion of the trust scheme or the preferential offering, whichever is earlier, on top of its earlier undertaking to fully receive the scrip-only consideration.
The funds raised are in addition to the S$417.3 million to be funded through the issuance of perpetual securities and/or debt funding, which were required under the original terms of the trust scheme.
The managers noted that the preferential offering will not be undertaken if all MNACT unitholders choose to receive either the scrip-only consideration or the cash-and-scrip consideration.
In the revised trust scheme, the cash-only consideration will be the default form of the scheme consideration, the managers said.
&ldquo If successful, the merged entity would become one of the largest Reits by market capitalisation listed in Asia, with a significantly larger scale and platform which is better positioned to unlock upside potential,&rdquo OCBC&rsquo s research team said in a report on Monday.
&ldquo That said, we believe MCT would gain new exposure to riskier markets and see dilution to its pure-play Singapore status,&rdquo it added.
OCBC is keeping its &ldquo buy&rdquo recommendation on MCT, with a fair value estimate of S$2.04.
&ldquo The addition of the third full-cash option provides MNACT unitholders with greater flexibility in choosing to either stay invested in the merged entity, or fully realise their investment,&rdquo the research team said.
i view the merger with mnact merger more like a bail out of mnact then growth as their hk festival walk (main component) has been suffering one event after another. the riots, then covid-19. now maybe better after the hk government annouced openning of border.
if mct stop the merger, the share price will raised again as eye survey of vivo says , crowd like going back there after the relaxation of covid-19 rule in singapore.
if one has wanted mnact one will invest in it. merger will only result in merged discount . like in a conglomerate there is always a discount due to little value add from overhead of corporate cost. unless there is a synergistic value add. which i do not see one for mct+mnact.
if mct stop the merger, the share price will raised again as eye survey of vivo says , crowd like going back there after the relaxation of covid-19 rule in singapore.
if one has wanted mnact one will invest in it. merger will only result in merged discount . like in a conglomerate there is always a discount due to little value add from overhead of corporate cost. unless there is a synergistic value add. which i do not see one for mct+mnact.
By right should be. But we never know when.
DPU good yield.
DPU good yield.
PhillipTan ( Date: 21-Mar-2022 17:14) Posted:
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By way of illustration, if the Trust Scheme becomes effective in accordance with its terms, an MNACT Unitholder holding 1,000 MNACT Units as at the Record Date will receive:
596 Consideration Units or
500 Consideration Units and S$191.20 in cash or
S$1,194.90 in cash.
The Scheme Issue Price of S$2.0039 per Consideration Unit may not be equivalent to the market price of, nor reflective of the fair value of, the Consideration Units at the Effective Date and/or the settlement date of the Trust Scheme. Each Consideration Unit may, depending on market conditions and sentiments, trade above or below the Scheme Issue Price of each Consideration Unit of S$2.0039.
The MCT Manager reserves the right to adjust the Scheme Consideration by reducing the Cash-Only Consideration, the cash and unit components of the Cash-and-Scrip Consideration, the number of Consideration Units issued or by any combination of such cash and unit components, if and to the extent any distribution in excess of the MNACT Permitted Distributions is declared, made or paid by the MNACT Manager on or after the Joint Announcement Date.
596 Consideration Units or
500 Consideration Units and S$191.20 in cash or
S$1,194.90 in cash.
The Scheme Issue Price of S$2.0039 per Consideration Unit may not be equivalent to the market price of, nor reflective of the fair value of, the Consideration Units at the Effective Date and/or the settlement date of the Trust Scheme. Each Consideration Unit may, depending on market conditions and sentiments, trade above or below the Scheme Issue Price of each Consideration Unit of S$2.0039.
The MCT Manager reserves the right to adjust the Scheme Consideration by reducing the Cash-Only Consideration, the cash and unit components of the Cash-and-Scrip Consideration, the number of Consideration Units issued or by any combination of such cash and unit components, if and to the extent any distribution in excess of the MNACT Permitted Distributions is declared, made or paid by the MNACT Manager on or after the Joint Announcement Date.
So merger or no merger, share price should be back up again to at least $2.00 right?
Since it dropped from $2.00 on the news of the merger?
Since it dropped from $2.00 on the news of the merger?
CheeryVGoh ( Date: 21-Mar-2022 15:07) Posted:
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