MPACT: Sale of Mapletree Anson for SGD 775 Million to Reduce Debt Level

We retain Mapletree Pan Asia Commercial Trust’s fair value estimate of SGD 1.74 per share after the proposed divestment of Mapletree Anson office tower for SGD 775 million. The proceeds will be used to pay off debt and the trust expects the aggregate leverage ratio and interest coverage ratio to improve to 37.6% and 3.3 times respectively, from 40.5% and 2.9 times as at March 31. Given that the divestment yield of 3.8% is lower than the cost of debt that is being paid off, management anticipates the divestment to result in a 1.5% accretion to its distribution per share. After updating our model for this divestment, our DPU forecasts for fiscal 2025-27 (ending March) were raised by 0.9%-1.2%. The trust is trading at an attractive fiscal 2025 distribution yield of 7.5%, based on its last closing price. While we think the shares are undervalued currently, we believe the negative outlook for its Hong Kong and China assets will continue to weigh on near-term share price performance.