“Given the reversal of the share price rally in CLI and MPACT since merger reports emerged last year, fewer investor queries on the topic in recent months, the recent CapitaLand Integrated Commercial Trust and CapitaLand Ascendas REIT equity raisings, and the difficulty in finding a win-win scenario for all stakeholders, we believe the likelihood of such a merger this year has diminished. This would be a positive outcome, as it would remove a potential overhang on the S-REIT sector, a concern raised by some investors earlier this year,” JP Morgan says.
According to a JP Morgan report summarising the Australian marketing trip, investors acknowledged that MPACT’s price is supported by its discount to net asset value. MPACT is trading at $1.23 versus its end-March net asset value (NAV) of $1.73.
In addition, interest cost savings could offset its China and Japan headwinds, JP Morgan says.
Interestingly, investors “were broadly supportive of a demerger”. MPACT’s Singapore properties such as Vivocity and Mapletree Business City are performing well versus its North Asian properties.
See also: Broker's Digest: Centurion Corp, Sembcorp, LHN, ThaiBev, Wee Hur, UI Boustead REIT, Lincotrade
“For UOL, investors sought clarity on the potential key catalysts including the Marina Square redevelopment, a potential REIT listing, and prospects for consolidating its Singland holdings,” JP Morgan says.
Elsewhere, investors’ queries were focused around CDL’s upcoming strategic review and the implications of the recent appointment of the vice chairman, Kwek Leng Peck, a cousin of the current CDL chairman, and as market talk would have it, a possible future chairman.
For office-focused REITs, the main discussion was around the outcome of Suntec REIT’s strategic review, and funding options for the potential acquisition of 9 Penang Road. The CEO of Suntec REIT’s manager has said he is looking to partially fund the acquisition from divestments of non-core assets.
See also: Maybank reiterates ‘buy’ call for Olam at unchanged $1.60
Unsurprisingly, investors wondered if Keppel REIT planned further dilutive equity fund raisings following its distribution per unit dilutive acquisition of a one-third stake in Marina Bay Financial Centre Tower 3.
Investor concerns also swirled around Keppel REIT’s possible acquisition of Keppel South Central, which is on its way to stabilisation.
