Mapletree North Asia Commercial Trust

[Nick]

Investor education starts for Mapletree Greater China Reit

The IPO is expected to raise about $1.5 billion, with up to half of that going to cornerstone investors.

http://www.financeasia.com/News/330288,i...-reit.aspx [Article]

Personally, the most interesting paragraph is the details on Management remuneration - 

Interestingly, MGCCT will pay its management company based on the distribution growth, which should make the interests of the manager and the investors much more aligned. It will also give the manager an added incentive to increase dividends. Normally, Reit managers in Asia are paid a fee based on the value of the assets, while under this new system the Reit manager won’t get paid for additional acquisitions until they result in an increase in the dividend per unit.

This may be highly attractive to yield investors since it discourages dilution to the DPU - both MIT and MCT have reported strong growth in DPU since listing. It may also compete with other fund manager models like ARA.

(Not Vested in MGCT)

[KopiKat]

Prelim Prospectus posted today

[shanrui_91]

Investor education starts for Mapletree Greater China Reit

The IPO is expected to raise about $1.5 billion, with up to half of that going to cornerstone investors.

http://www.financeasia.com/News/330288,i...-reit.aspx [Article]

Personally, the most interesting paragraph is the details on Management remuneration -

Interestingly, MGCCT will pay its management company based on the distribution growth, which should make the interests of the manager and the investors much more aligned. It will also give the manager an added incentive to increase dividends. Normally, Reit managers in Asia are paid a fee based on the value of the assets, while under this new system the Reit manager won’t get paid for additional acquisitions until they result in an increase in the dividend per unit.

This may be highly attractive to yield investors since it discourages dilution to the DPU - both MIT and MCT have reported strong growth in DPU since listing. It may also compete with other fund manager models like ARA.

(Not Vested in MGCT)

"Under the Trust Deed, the Manager is entitled to receive a base fee of 10.0% per annum of the Distributable Income (the “Base Fee”), as well as a performance fee of 25.0% of the difference in DPU in a financial year with the DPU in the preceding financial year (calculated before accounting for the performance fee (as defined herein) in each financial year) multiplied by the weighted average number of Units in issue for such financial year (the “Performance Fee”). The Manager has also adopted an acquisition fee of 0.75% for acquisitions from Related Parties (as defined herein) and 1.0% for all other acquisitions."

By using distributable income as a benchmark for base fee, it is certainly more fair as compared to total asset value. It will also take into account your finance expense which is an important variable. Hence, it is not just about what kind of npi that can be generated but the distributable income that really matters for unitholder. As for performance fee, it is directly linked to growth unlike the other DPU growth model where only a certain hurdle rate needs to be exceeded. In addition, there is a slight reduction of acquisition fee if it is from Related Parties.

This is slightly better than the Ascendas model though I believe that the internally-owned manager model adopted by The Link is still the best. Nonetheless, sometimes it is not about what model is adopted, but the kind of relationship the manager, the sponsor and the unitholder have.

[Nick]

I don't think this model is fundamentally different from the current ones - M&A will always increase the absolute distributable income as long as asset return exceeds financing cost. If they can't even do that, then it doesn't matter what fee structure is adopted since they are already proven to be largely incompetent. Most REITs generate ROA of 4 - 5% (CRCT 4.5%) and charge 0.5% of AUM as fees so 10% of distributable profits = 0.5% of AUM (if ROA = 5%). At least performance fees is pegged to DPU growth as opposed to absolute Net Property Income.

[WolfT]

Hmmm...kopi money alert.I will ballot! Huat arrr!

[pianist]

Has the prospectus come out Liao?

[piggo]

Festival Walk looks good, but 40% gearing? Gateway Plaza is quite a distance (15km) from the financial street...

With the compensation geared towards distributing most if not all of the income, future growth will involve leveraging up/increase in property valuations?

[felixleong]

gearing over 40%... within 2 years dunno will rights issue or not, be careful wor ^^

[BeDisciplined]

Ascendas Reits also got risks during IPO with its PRC hotels not finalized and currency risks but it still turns out good. With interest staying low for a much longer time, 5% yield is god send.

Each matured country is falling over each other to print money, US, EURO and now Japan, WW economy is addicted to cheap money and high liquidity, really don't know how these country central banks can pull the plug without hurting the economy. Could be at best, stop printing but sucking out the excess liquidity could throw the economy into a withdrawal syndrome.

All those listed REITS ahve P/B of 1.2 to 1.3, so expensive. Where to find a cheap one with 5% to 6% yield.

As long as it is yield accretive, issue more units shouldn't be a problem. Isn't that how existing Reits have been growing in portfpolio in the last decade?

[CityFarmer]

Mapletree prices REIT IPO at S$0.93

SINGAPORE — Mapletree Investments plans to sell shares in an initial public offering of a real estate investment trust at the top end of a marketed range, raising about S$1.6 billion, said three people with knowledge of the matter.

Mapletree Greater China Commercial Trust, backed by assets in Hong Kong and China, will be priced at 93 Singapore cents a share, the people said. The shares had been offered at 88 cents to 93 cents. Final pricing will be announced before the public offer opens on Thursday, Mapletree Investments said. BLOOMBERG

http://www.todayonline.com/business/mapl...t-ipo-s093