Singapore Reit aims to reopen Festival Walk mall in HK early next year

Janet Ong
·Finance Editor
Singapore Reit hopes to reopen Festival Walk mall in Q1 2020
A protester seen next to a burning Christmas tree at the Festival Walk mall in Hong Kong on 12 November 2019. (PHOTO: Reuters)

SINGAPORE — Mapletree North Asia Commercial Trust Management aims to reopen its Festival Walk mall in Hong Kong, which was damaged during the city-wide protests, in 2020.

The mall will either partially or fully reopen in the first quarter of next year, the manager of Singapore-listed Reit said in a statement late on Wednesday (4 December).

The mall has been closed since 13 November, after protesters stormed the building and set fire to the Christmas tree in its atrium and damaged property, including smashing glass panels and balustrades.

Festival Walk mall, Mapletree’s first commercial property acquisition in Hong Kong, was bought in 2011 for S$2.9 billion. It is located near the Kowloon Tong subway station and has more than 200 retail stores and restaurants, including Apple, Marks & Spencer and Uniqlo.

Rental won’t be collected from retail tenants during the mall’s closure. No rental was collected from the property’s office tower from 13 to 25 November, although this has since resumed since its reopening on 26 November.

The manager said its second-half distribution per unit (DPU) is expected to be “significantly lower” than the same period a year ago. To make up for the impact, the trust manager will implement a top-up to the distributable income for the third and fourth quarter of the 2019-2020 financial year, as well as the first quarter of the 2020-2021 financial year.

The top-up is to enable a certain level of distributable income to be made until such time that the loss of revenue is recovered through the insurance claims, the statement said. The amount, based on approximately 40 per cent of the Festival Walk’s retail revenue, will be funded by external borrowings.

Once the insurance claims proceeds are received, they will be used to repay the external borrowings used to fund the distribution top-up, and the balance will be distributed as part of the distributable income payable to unit holders.

Separately, Mapletree North Asia Commercial Trust Management also announced its plans to acquire two office properties in Greater Tokyo for S$482.5 million from Mapletree Investments.

“The proposed acquisition of the towers will contribute to the diversification of the trust and reduce the income and asset concentration of Festival Walk,” Cindy Chow, chief executive officer of the Reit manager, said in a separate statement.

The two properties — mBay Point Makuhari Building in Chiba and Omori Prime Building in Tokyo — have a net property income yield of 4.5 per cent.

The Reit manager plans to finance the acquisition by issuing units to Suffolk Assets, a wholly-owned subsidiary of Mapletree Investments, debt financing, and internal cash resources.

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