I will simply highlight my key observations.
For MCT holders:
1) Distribution per Unit(DPU) positive.
DPU (1HFY2021) will increase from 4.39cts to 4.72 - 4.78cts depending on MNACT holders choosing all script or script/cash options. This represent a 7.5 - 8.9% increase in DPU post acquisition.
2) Net asset value (NAV) positive.
NAV will increase from $1.68 to $1.79 - $1.80 depending on MNACT holders choosing all script or script/cash options. This represent a 6.5 - 7.1% increase in NAV.
3) Gearing Ratio negative.
Gearing for MCT holders will increase form 33.7% to 39.2%.
For MNACT holders:
1) Distribution per Unit(DPU) negative.
DPU (FY2020) will decrease from 6.175 cts to 5.60 - 5.67 cts depending on MNACT holders choosing all script or script/cash options. This represent a 8.2 - 9.3% increase in DPU post acquisition.
2) Net asset value (NAV) negative.
NAV will increase from $1.265 (pre distribution) to $1.10. This represent a 13% decrease in NAV.
3) Gearing Ratio positive.
Gearing will decrease from 41.4% to 38- 39.2% depending on MNACT holders choosing all script or script/cash options.
Conclusion:
To make the deal more attractive to MNACT holders, offer price is $1.19, which is at NAV after the recent distribution. MNACT has not trade above its NAV since the HK riot started in 2019, so a $1.19 offer seems very reasonable.
MNACT will enjoy the continual growth with the Newco ( Mapletree Pan Asia Commercial Trust(MPACT) and compensated for the drop in DPU with a $1.19 offer.
For MCT holders, unitholders have nothing much more to ask for.
Existing holders will get higher DPU and NAV, thou Gearing has increased.
The rise in Gearing should not be too much of an issue as it is still below the required 50%.
Comparing with Capital Integrated Commercial Trust (CICT),
P/NAV = 1.02x (CICT) vs 1.11-1.12x (MPACT)
Yield = 5.34% (CICT) vs 4.72 - 4.78%(MPACT)
Gearing = 40.9% (CICT) vs 39.2% (MPACT)
MPACT will be a closer competitor to CICT thou I think both are very well managed REITs.
Personally, if I own MCT , I will sell and buy into CICT.
If I own MNACT, I will sell at market if it is close to $1.19 and buying into Capital Retail China Trust.
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