MNACT buying 2 Tokyo offices that will help mitigate revenue loss from Festival Walk closure
Singapore
MAPLETREE North Asia Commercial Trust's (MNACT) manager announced on Wednesday that it is acquiring an effective interest of 98.47 per cent in two freehold office properties in Greater Tokyo, Japan for S$482.5 million (37.9 billion yen) from Mapletree Investments.
The total acquisition cost comprises of the aggregate consideration of approximately S$477.7 million and the estimated professional and other fees and expenses of some S$4.8 million. The proposed acquisitions have a net property income yield of 4.5 per cent.
The two properties are mBay Point Makuhari Building (MBP) in Chiba and Omori Prime Building (OPB) in Tokyo. The assets have a gross floor area of 180,941 square metre (sqm) altogether and net lettable area of 91,583 sqm. As at Sept 30, the occupancy rate was 85.9 per cent, with 53 tenants altogether.
Cindy Chow, CEO of the manager, said that the proposed acquisition of the two office towers in Greater Tokyo will contribute to the diversification of MNACT and reduce the income and asset concentration of Festival Walk. Festival Walk is its retail mall in Hong Kong that was closed since Nov 13 due to extensive damage by Hong Kong protestors.
She pointed out that the properties in Japan are freehold and provide a "relatively higher yield spread against the local cost of funds" compared to the Greater China market.
The manager intends to finance the acquisition by issuing new units to the sponsor's nominee (Suffolk Assets, a wholly-owned subsidiary of Mapletree Investments), as well as from debt financing and internal cash resources. The issuance of units to Suffolk Assets is subject to the grant of a whitewash waiver.
Separately, MNACT's manager also announced that it hopes to reopen the Festival Walk mall, either partially or fully, in the first quarter of 2020. The re-opening is also subject to approvals from the relevant authorities.
Due to the loss of retail and office revenue from damages sustained, the manager said that MNACT's distribution per unit (DPU) for the H2FY20 is expected to be significantly lower compared to the same period last year.
To mitigate the impact on the distributable income payable to unitholders, the manager will implement a top-up to the distributable income for the third and fourth quarter of FY20, as well as the first quarter of FY21.
The distribution top-up is to enable a certain level of distributable income to be made until such time the loss of revenue is recovered through the insurance claims, said the manager.
