The Mapletree Greater China Commercial Trust (MGCCT) IPO was launched last week and will close on 5 March 2013 at noon.
At a price of $0.93, MGCCT offers a projected distribution yield of 5.6% and 6.1% for the next two years.
I’m not a big fan of this MGCCT IPO for the following reasons:
- It only holds 2 properties currently: Gateway Plaza and Festival Walk. The lease of the 2 properties are also till 2047 and 2053 only.
- As an overseas property REIT (with additional overseas and currency exposure), the yield is not particularly attractive.
- The offering price of $0.93 is at a premium to the Net Asset Value (NAV) of $0.91.
- There’s a pending litigation appeal that I do not really understand. Refer to page 53 of the MGCCT Prospectus under the heading “There is a pending appeal in relation to HK Gateway Plaza Company Limited which owns Gateway Plaza that may adversely affect the value of the Units.”
Of course, in the short term, no one can really predict how the price will go.
You can download the 700 page prospectus here :