Mapletree REITs Merger | What You Need To Know!

Mapletree Commercial Trust has announced a merger with Mapletree North Asia Commercial Trust, however MCT’s investor aren’t happy about it. I’ll explain what’s the effect of the merger, what are the downsides, why are they planning to merge and what’s my thoughts on the merger.

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0:00 - Intro

0:43 - What’s the effect of the merger?
5 properties from MCT and 13 properties from MNACT will merge to form Mapletree Pan Asia Commercial Trust. The top 3 new tenants will now be Google, BMW and Seiko. MPACT will become the 7th largest REIT in Asia.

Free float will go up to $6.7B and their weightage in indexes will go up. Dividend per unit will increase up to 4.78 and NAV will go up to 1.8. Management base fee will be paid according to percentage of distributable income, which is more aligned to investors.

3:09 - Downsides of the merger
After this news, MNACT went up while MCT went down. Moody also downgraded MCT’s rating while upgrading MNACT’s rating. So, here are the reasons why the merger is bad for MCT.

1. MNACT’s debt
MNACT’s gearing ratio is at 42.2% while MCT’s gearing ratio is just 33.7%. After the merge, MCT had to take on extra debt.

2. MNACT’s assets
2 of MNACT’s assets aren’t performing so well. Festival Walk has a -30% rental reversion, while Gateway Plaza has a -24% rental reversion. Both of them contributes to a large part of MNACT’s gross revenue. On top of that, 1 of Gateway’s Plaza major tenants might not be planning to extend beyond December 2023, so this asset’s revenue might drop for a while more.

3. Forex risk
MNACT’s properties are overseas. After the merger, 49% of MPACT will now be exposed to forex risk. And based on past data, most of the currencies have dropped except for CNY.

7:10 - Why are they planning to merge?
The most obvious reason is to bail out MNACT. But there are other reasons. All along MCT main focus is only in Singapore, hence they are unable to acquire any new properties because existing ones have been acquired by other REITs. With this merger, MCT will be able to access more market in Asia.

8:37 - My thoughts
10:02 - Which option should you choose

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Some of the links and other products that appear on this video are from companies which Kelvin Learns Investing will earn an affiliate commission or referral bonus.*

Видео Mapletree REITs Merger | What You Need To Know! канала Kelvin Learns Investing