UPDATE: Quarz Capital opposes Mapletree Commercial-MNACT deal’s ‘value destructive’ terms

Mapletree Commercial Trust's VivoCity retail property in Singapore. Mapletree North Asia Commercial Trust (MNACT) and Mapletree Commercial Trust agreed in December 2021 to merge to form Mapletree Pan-Asia Commercial Trust. Credit: Mapletree Commercial Trust; Rendy Aryanto/VVS.sgMapletree Commercial Trust's VivoCity retail property in Singapore. Mapletree North Asia Commercial Trust (MNACT) and Mapletree Commercial Trust agreed in December 2021 to merge to form Mapletree Pan-Asia Commercial Trust. Credit: Mapletree Commercial Trust; Rendy Aryanto/VVS.sg

This item was initially published on Thursday, 10 February 2022 at 14:49 SGT; it has since been updated with more details.

Quarz Capital Management came out in opposition to the terms of the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust (MNACT), calling it “opportunistic, inadequate and value destructive to MNACT unitholders.”

The Singapore-based activist investor said in an open letter dated 9 February that it believed the proposed merger is “highly compelling and will potentially create a powerful Pan Asian real estate platform.”

But, particularly as Mapletree Commercial Trust’s unit price corrected since the merger announcement, the proposed offer price is now at one of the highest discounts to net asset value in the Singapore REIT market’s 20-year history, Quarz said. 

“We urge MNACT’s board and management to protect unitholders’ interest and negotiate for a higher and fairer merger offer,” the letter said.

Quarz said a fair offer must be above MNACT’s net asset value of S$1.23. 

The letter was initially reported by Reuters Thursday

Quarz told Shenton Wire it and its affiliates are among the top-10 unitholders of MNACT; Quarz said its assets under management is around S$210 million.

In late December, the two trusts announced a plan to merge into Mapletree Pan-Asia Commercial Trust in a S$4.22 billion deal, creating one of Asia’s top-10 largest REITs with assets across Singapore, South Korea, China, Hong Kong and Japan.

Under the deal, which will be a trust scheme of arrangement, unitholders of MNACT will receive S$1.1949 for each unit, to be paid by either 0.5963 new MCT unit issued at S$2.0039, or a combination of 0.5009 MCT unit and S$0.1912 in cash.

In its letter, Quarz said the new MCT units should be issued at a “more realistic value” of S$1.82. 

Units of Mapletree Commercial Trust ended Thursday at S$1.84, up 0.55 percent, while MNACT units were at S$1.12, up 0.9 percent. 

Quarz previously managed to rally the votes to block ESR-REIT’s takeover of Sabana Industrial REIT. 

MNACT, Mapletree Commercial Trust and Singapore state-owned investment company Temasek Holdings, which is the largest unitholder of both trusts, all declined to comment to Reuters.