Sunday 7 May 2023

Saying Goodbye to Mapletree Pan Asia Commercial Trust.

I have just sold off all my 16,000 units in Mapletree Pan Asia Commercial Trust ("MPACT") during the 1st week of May 2023. The main reason being that Festival Walk and other China overseas office assets are becoming more of a liability to MPACT now. True enough, in the recently announced results for Q4 2023, their Hong Kong jewel property, Festival Walk, reported negative rental reversion again. It seems that VivoCity and Mapletree Business City are being left to hold the fort for MPACT. My personal thoughts are that the merger exercise last year to combine the 2 Mapletree REITs had not produced much synergy and on the contrary, it appears to be destroying value for investors due to the under performance of the newly acquired overseas properties in Hong Kong and China.  

1. Falling Overseas Properties Valuation
The staggering loss in property valuation of S$398Mil mainly due to forex translation losses is just astonishing. 

2. Low Occupancy For Overseas Assets
The office properties in China are the main culprit for the lowly 86.5% occupancy. 

3. Hong Kong's Festival Walk Failed To Deliver Yet Again
Festival Walk which made up 18% of Gross Revenue contribution has a negative -12.7% rental reversion despite the gradual lifting of COVID measures in Hong Kong which have improved retail sales and shoppers traffic at the mall. This really makes one wonder when will this nightmarish downtrend end and turn positive. While I have no doubt that this will turn around eventually, it may be a longer wait then expected. 

Parting thoughts
I do hope that MPACT management starts considering the disposal of weaker overseas assets such as those China offices in order to shore up its financial performance and also to reduce its debt gearing which has exceeded over 40% (last year was 33.5% before the merger), especially in view of the current crazy high interest rate environment. 

Anyway, as aforesaid mentioned, I had decided to throw in the towel and exited with a decent overall profit last week. Will be re-investing the proceeds into another SGX blue-chip company (non-REITs) for its better growth prospects as well as decent dividend yield of over 5% (will probably blog about this another day). 

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