Mapletree Commercial Trust property, VivoCity. (Photo: Mapletree Commercial Trust)Mapletree Pan Asia Commercial Trust property, VivoCity. (Photo: Mapletree Commercial Trust)

The managers of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) have announced a proposed merger.

The move will create a flagship commercial REIT positioned to be a proxy to key gateway markets of Asia, reads a joint statement issued by the REITs on 31 December.

The combined entity will be known as the Mapletree Pan Asia Commercial Trust (MPACT) and it will have a market capitalisation of approximately SGD10.5 billion.

MPACT is expected to become Asia’s top ten largest REIT with a SGD17 billion portfolio of 18 commercial assets across Singapore, China, Hong Kong, Japan and South Korea.

“The merger is a win-win for both MCT and MNACT unitholders and compelling on multiple fronts', said Sharon Lim, CEO of MCT.

“Financially, MCT unitholders can immediately enjoy approximately 8.9% and 6.5% of accretion to DPU and NAV respectively on a pro forma basis”, she posited.

“On a strategic level, we believe this is a once-in-a-lifetime opportunity to bring together two leading commercial REITs with highly complementary qualities”, she added.

“MCT has a longstanding track record of stability and strength, while MNACT offers a ready launchpad into key gateway markets of Asia”.

Therefore, by merging the two REITs, we can better unlock the upside potential of a multiple-geography platform, put the merged entity onto a new growth trajectory, and crystallise MPACT’s position as a distinctive proxy to the long-term rise of Asia”, said Lim.

Under the trust scheme, MCT will acquire all MNACT units in exchange for new units in MCT or a mix of cash and MCT units.

Unitholders of MNACT will receive a consideration of SGD1.1949 per unit.

The consideration will be either 0.5963 new MCT units at an issue price of SGD2.0039 per MNACT unit, or a combination of 0.5009 new units in MCT and 19.12 cents in cash.

The proposed merger will require approvals from unitholders, which will be sought at their respective extraordinary general meetings (EGMs).

Prior to a trading halt requested for both REITs on 28 December, units of MCT and MNACT were last done on the SGX at SGD2.00 and SGD1.11 respectively.

This presently implies distribution yields of 4.39% and 6.17% according to data on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.