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MPACT to divest Mapletree Anson for $775 mil in bid to pare debt

By The Edge Singapore

/ EdgeProp Singapore |

May 30, 2024 12:23 AM SGT

Aggregate leverage will be lowered from 40.5% as at March 31 to 37.6% on a pro forma basis.

Mapletree Pan Asia Commercial Trust (MPACT) plans to divest Mapletree Anson for $775 million and channel the proceeds to pare down debt, joining a growing list of REITs and trusts divesting assets in a bid to ease balance sheet strain.

The sale to an unnamed third party is at a gain of $10 million over the property's valuation of $765 million as at March 31. It will also be a premium of $95.0 million above the original purchase price of $680 million paid back in 2012. JLL was the exclusive advisor on the transaction.

The buyer is said to be Hong Kong-based private equity fund PAG, which acquired Goldin Financial Global Centre in a 50:50 joint venture with Mapletree Investments in January 2023. The partners purchased the premium office building in Kowloon East from the receivers for HK$5.6 billion ($970 million).

MAapletree Anson is a 19-storey office building located in the Tanjong Pagar in the CBD and a two-minute walk to the Tanjong Pagar MRT Station on the East-West Line. Completed in July 2009, it has 320,000 sq ft of net lettable office space. The property has a 99-year lease from 2007.

Mapletree Anson was valued by CBRE at $765 million as at March 31, 2024 (Photo: MPACT)

MPACT is expecting net proceeds of $762 million and can help reduce its aggregate leverage from 40.5% as at March 31 to 37.6% on a pro forma basis.

The sale can help improve MPACT's adjusted interest coverage ratio from 2.9 times to 3.3 times on a pro forma basis. With a lower gearing level, MPACT's debt headroom can increase to $3.9 billion from $3.2 billion as at March 31.

MPACT says the divestment can help generate around 1.5% accretion to FY2023 - FY2024 DPU on a pro forma basis. "MPACT will be favourably positioned to safeguard and potentially enhance unitholder value in the future," says the company in a statement.

Sharon Lim, CEO of the manager, says the divestment is a proactive step to enhance MPACT's financial resilience and agility to respond to the market.

She adds that with the divestment, MPACT's proportion of Singapore assets will be reduced, but with more than half of the portfolio value, assets here remain the "cornerstone" of its investment strategy.

VivoCity mall and Mapletree Business City (pictured) are one of MPACT's crown jewels and contribute to 53% of its net property income and AUM, respectively (Photo: Samuel Isaac Chua/EdgeProp Singapore)

MPACT's crown jewels are the VivoCity mall and the Mapletree Business City. These two assets contribute 58% and 53% to its net property income and AUM, respectively.

Its other assets are in Hong Kong, China and other parts of Asia, which tend to underperform relative to the Singapore assets.

Upon completion of the deal, MPACT will own 17 properties with a total AUM of $15.7 billion.

'As we move forward, our portfolio management approach will continue to be agile and adaptive," says Lim.

The transaction is scheduled for completion in July 2024.

MPACT units closed at $1.22 on May 30, unchanged for the day but down 20.78% year to date.

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