@ghchua,
Quarz Capital's argument reminds me of the previous classic Class95's "Hear Only the Good Stuff" commercial.
https://www.youtube.com/watch?v=RFcKLuR8G9A
It is no secret that a REIT that trades >NAV will continue to trade at >NAV - As it issues "expensive" new equity to buy up assets <NAV, this in turn boasts its own NAV after the trade is done. If no gross mistakes are made, this virtuous cycle will not end. Unfortunately, MNACT is on an anti-virtuous cycle of trading <NAV and not able to acquire assets using expensive equity. So in order to piggy back onto one, something's gonna give, like selling itself cheap(er).
Now that MNACT price has increased, while MCT's has reduced. Maybe a better option for MNACT OPMIs would be to sell out MNACT and then use the proceeds to buy into MCT? This will hedge against the failure of the deal now that Quarz Capital are in play.
@mslee888
The one benefiting absolutely from the deal, would be the broker on both sides of the deal. Since MNACT is on an anti-virtuous cycle, it limits their ability to increase their AUM (and hence mgt fees). What is better than allowing the weaker one to latch onto the stronger one and then the combined entity continuing to ride the virtuous cycle? The guys at Keppel have already shown how it is done with their recent data center-M1 combination.
That said, I would not rule out MCT holders eventually benefitting from the deal via acquiring "cheap" assets using "expensive" equity. A stake in Festive Walk could actually be buying a call option for a future HK recovery (from political turmoil and covid19)
Quarz Capital's argument reminds me of the previous classic Class95's "Hear Only the Good Stuff" commercial.
https://www.youtube.com/watch?v=RFcKLuR8G9A
It is no secret that a REIT that trades >NAV will continue to trade at >NAV - As it issues "expensive" new equity to buy up assets <NAV, this in turn boasts its own NAV after the trade is done. If no gross mistakes are made, this virtuous cycle will not end. Unfortunately, MNACT is on an anti-virtuous cycle of trading <NAV and not able to acquire assets using expensive equity. So in order to piggy back onto one, something's gonna give, like selling itself cheap(er).
Now that MNACT price has increased, while MCT's has reduced. Maybe a better option for MNACT OPMIs would be to sell out MNACT and then use the proceeds to buy into MCT? This will hedge against the failure of the deal now that Quarz Capital are in play.
@mslee888
The one benefiting absolutely from the deal, would be the broker on both sides of the deal. Since MNACT is on an anti-virtuous cycle, it limits their ability to increase their AUM (and hence mgt fees). What is better than allowing the weaker one to latch onto the stronger one and then the combined entity continuing to ride the virtuous cycle? The guys at Keppel have already shown how it is done with their recent data center-M1 combination.
That said, I would not rule out MCT holders eventually benefitting from the deal via acquiring "cheap" assets using "expensive" equity. A stake in Festive Walk could actually be buying a call option for a future HK recovery (from political turmoil and covid19)