Macquarie May Exit MMP Reit Under Strategic Review

Source : The Business Times, February 20, 2008

MACQUARIE MEAG Prime (MMP) Reit will undergo a strategic review that may see the Macquarie Group sell its stake in the fund.

In a statement, the Reit’s manager - Macquarie Pacific Star Prime Reit Management - said that the exercise aims to enhance the value for all unitholders. It may consider options like merger & acquisitions, full-privatisation or sale of assets, chief executive officer Franklin Heng told BT.

The announcement confirms an earlier BT report that the Macquarie Group, which owns 26 per cent of the Reit, is prepared to exit from the fund under a proposed strategic review.

Indeed, Macquarie Pacific Star said that the move came after the ‘receipt of a number of unsolicited approaches’ made to Macquarie Real Estate, part of the Macquarie Group.

Macquarie Real Estate also has an associated entity that owns a 50 per cent stake in the Reit’s manager.

The key shareholder said it will cooperate with the directors of Macquarie Pacific Star in order to maximise value for all unitholders. The strategic review will be undertaken in the context of strong underlying property fundamentals in the Singapore market.

‘The quality of MMP Reit’s portfolio of real estate assets is supported by MMP Reit’s recent announcement of an increase in its net asset value to $1.61 per unit as at December 31, 2007.’

MMP Reit last traded at $1.08 - a 32.9 per cent discount to its NTA (net tangible asset) and the strategic review will explore options to ‘close this value gap’.

Macquarie Pacific Star intends to appoint Macquarie Securities (Asia) Pte Limited of Singapore to advise it on the strategic review. The entire exercise is expected to be completed by June this year.

Yesterday, the Reit’s manager also cautioned that there is no assurance that the strategic review will result in any specific transaction.

MMP Reit reported a 15.7 per cent year-on-year rise in distributable income to $16.2 million for the fourth quarter ended Dec 31, 2007. The Q4 distribution brought 2007 full year’s distributable income to $59 million, up 7.5 per cent.