MGCCT - a large HK retail asset

ONE of the larger counters to hit the market last year was Mapletree Greater China Commercial Trust (MGCCT), also known by its Bloomberg name MAGIC:SP. The Reit's initial public offering last year raised $1.7 billion. MGCCT's advantage lies in its low cost of debt. Parent Mapletree Investments is wholly owned by Government investment company Temasek Holdings. MGCCT is the only overseas retail Reit here to have a credit rating. It is rated Baa1 by Moody's - putting it on an investment grade level that should allow for cheaper fundraising and higher gearing.

MGCCT is not precisely a retail Reit, but more of a diversified counter that has exposure to both office and retail assets. The Reit has two assets worth a total of $4.4 billion: Festival Walk in Hong Kong and Gateway Plaza in Beijing. The retail component dominates for Festival Walk, and the office component dominates for Gateway Plaza.

Nevertheless, its main asset Festival Walk is essentially a giant shopping mall, contributing about three quarters of revenue and net property income. The property comprises seven storeys of retail and another four storeys of offices on top of the mall, with three floors of underground car parks. It has 580,000 sq ft of retail lettable area and 214,000 sq ft of office lettable area. Retail generates most of the rental income. It is by the Kowloon Tong MTR station, which is also an interchange for commuters to switch to a line to the New Territories and the China border.