SINGAPORE (Jan 13): The new year could well bring about new joys for Mapletree North Asia Commercial Trust (MNACT), as its key asset Festival Walk looks to reopen its doors on Jan 16 – months earlier than expected.
Dragged into the Hong Kong protests, Festival Walk had suffered “extensive damage” as a few groups of protestors smashed glass panels at entrances to the mall, including the office lobby and balustrades on various levels of the property.
Amid worsening city-wide disruptions, Festival Walk had shut its doors on Nov 12, with the REIT’s manager saying that damage assessments were ongoing.
See: DBS remains bullish on MNACT as Festival Walk gets dragged into Hong Kong unrest
See: MNACT falls 4.9% as Hong Kong protestors torch key asset Festival Walk
In a Dec 6 report, DBS analyst Derek Tan had anticipated that Festival Walk was likely to remain closed the end of 1QFY20, or the end of June 2020, with MNACT likely to bear a loss of rental income till then.
On the back of lower rental reversion assumptions, the brokerage had adjusted its target price for the REIT to $1.30, some 19% lower than its previous target price of $1.60. It had also slashed its FY20F and FY21F DPU estimates by 23% and 8% respectively.
However, MNACT’s update on Jan 10 stresses that all efforts to re-open Festival Walk ahead of the Lunar New Year festive season are well underway.
“Some of the repair and replacement works are expected to continue within the mall after it re-opens,” said MNACT’s manager, adding that it will provide further updates in due course.
According to DBS’s Tan, the earlier-than-anticipated re-opening of Festival Walk “bodes well” for the REIT, as it serves as a testament to the REIT management’s crisis management ability and operational capability to address damages and rectify them.
“If the mall opens close to full occupancy will also be a boost to confidence that Festival Walk continue to remain part of retailers’ plans to maintain a presence in Hong Kong, amidst the ongoing news narratives of the negative sentiment amongst retailers,” says Tan.
“Assuming no further protests damages or mischief, if rental income is collected 5 months ahead of projections, we anticipate upside to our FY20F / FY21F estimates,” he adds.
Units in MNACT closed flat at $1.17 on Monday.
