MCT, MNACT unitholders approve merger to create third largest Reit in Singapore

UNITHOLDERS of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) have voted in favour of the merger to create one of Asia’s 10 largest real estate investment trusts (Reits).

The merged entity, to be named Mapletree Pan Asia Commercial Trust (MPACT), will have a theoretical market capitalisation of approximately S$10.5 billion – ranking it among the top 3 Reits listed in Singapore, behind CapitaLand Integrated Commercial Trust (CICT) and Ascendas Reit.

At separate extraordinary general meetings (EGMs) on Monday (May 23), all resolutions to pave the way for the merger were duly passed.

At MCT’s EGM in the morning, some 91.7 per cent of MCT unitholders voted to approve the merger.

Around the same percentage of votes were also in favour of the proposed allotment and issuance of MCT units to MNACT unitholders as consideration for the merger.

“We are heartened to receive the approval from MCT unitholders for the merger,” said Sharon Lim, chief executive officer of the MCT manager. “Our primary commitment to MCT unitholders remains unchanged – to drive long-term growth and sustainable return.”

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“The enlarged scale and stronger financial muscles of MPACT will enable us to undertake capital recycling opportunities, take on value-enhancing asset enhancement and development initiatives, and pursue larger acquisitions in Asia’s key gateway market,” she added.

At MNACT’s EGM later in the day, approximately 99.0 per cent of MNACT unitholders were in favour of proposed amendments to the MNACT trust deed. This is to introduce provisions to facilitate the implementation of the trust scheme of arrangement.

At a trust scheme meeting following the EGM, some 86.2 per cent of MNACT unitholders representing 97.7 per cent in value of the units held voted to approve the trust scheme.

“We are grateful for the strong support and mandate from our unitholders, which is a testament to their confidence in the transformative merger,” said Cindy Chow, chief executive officer of the MNACT manager.

The approval of the merger from both sets of unitholders comes after the managers of the 2 Mapletree Reits in March offered MNACT unitholders the option to receive the entire scheme consideration of their proposed merger wholly in cash, at S$1.1949 per unit.

The cash-only consideration is the default form of the scheme consideration under the revised trust scheme.

To fund the additional cash requirement of up to S$2.2 billion from the cash-only option, MCT will make a preferential offering of up to 1.09 billion units at S$2.0039 each – which is the same as the scheme issue price of each consideration unit.

Mapletree Investments – a privately held unit of Temasek Holdings and the sponsor of both MCT and MNACT – has provided an undertaking to subscribe up to the full S$2.2 billion in the preferential offering at the issue price.

Under the original proposal of the trust scheme, MNACT unitholders would receive a scheme consideration of S$1.1949 for each MNACT unit held, either in the form of 0.5963 new MCT units at an issue price of S$2.0039 each, or a combination of 0.5009 consideration units and S$0.1912 in cash.

The cash-only option was seen as a way to appease disgruntled unitholders on both sides.

In February, the Securities Investors Association (Singapore), or Sias, questioned the necessity of the proposed merger, given the lack of “apparent operational synergies" between the 2 Reits.

Activist fund manager Quarz Capital Management had also been vocal in its disagreement of the merger, arguing that the initial terms of the proposed merger undervalued MNACT’s assets.

Quarz later described the cash-only offer as “fair” and “a win-win for all parties”.

Post-merger, the MPACT portfolio will comprise 18 commercial assets across 5 Asian markets – Singapore, China, Hong Kong, Japan and South Korea – with total assets under management of S$17.1 billion.

Subject to the necessary approvals and the satisfaction or waiver of all conditions, the effective date of the trust scheme is expected to be in early August. Following this, MNACT will be delisted from the Singapore Exchange in mid August.