Macau Property Opportunities Fund’s portfolio has registered a drop in value for the second consecutive year – a consequence of the continued decline in Macau’s gaming revenue and its slowing economy, largely attributable to China’s anti-corruption campaign. For the year in review (12 months to 30 June 2016), Macau Property Opportunities Fund’s portfolio of properties was valued at US$393.7 million, 15% lower than the previous year. Adjusted NAV was US$226.3 million, translating to US$2.96 (223 pence) per share. IFRS NAV declined 30% to US$106.6 million, with an IFRS NAV per share of US$1.40 (105 pence). Macau Property Opportunities Fund’s closing share price on 30 June 2016 reflected a 53% discount to Adjusted NAV per share – a level deemed unacceptable by the Board and one which they seek to address by continuing to return funds in excess of operating needs to shareholders when opportunities arise.
During this downturn, they have continued to focus on strengthening the position of their properties as distinct, desirable developments, ensuring that the assets continue to meet the increasingly sophisticated demands of buyers and tenants. To maintain The Waterside’s position as Macau’s pre-eminent residential development for lease, we are carrying out extensive asset enhancement initiatives to the development, starting with the untenanted units. In an extremely sluggish leasing market, The Waterside achieved an occupancy rate of above 40%, relatively unchanged since the last full-year reporting period.
They embarked on numerous marketing activities to maintain awareness of The Fountainside, in anticipation of an eventual recovery in demand. Sale prices have also been adjusted to ensure that the property remains competitive but sales in the mid and high-end property segments were difficult to achieve during the period. Since undergoing enhancement work a year ago, Estrada da Penha has attracted significant attention. They remain focused on achieving an optimal sale price for this prominent, premium property.
The Urban Condition Plan for Senado Square was finally granted in May. This is a major milestone on what has been a lengthy project, and we are continuing to work closely with the relevant authorities to achieve full planning approval.
An AGM and a discontinuation vote will be held in November, following presentation of the Board’s recommendations to shareholders. These will include extending the Fund’s life for another 2 years from November 2016. Thereafter, it is proposed that a 1-year extension be voted on annually, with the voting threshold reduced from 75% to 50% from 2018 onwards.
Finally, any performance fees due to the Manager of the Fund will, from this November, be payable only upon the successful disposal of assets and the return of funds to shareholders, as well as after the performance hurdle and high water mark have been exceeded.
MPO : Gambling slowdown still weighs on Macau Property Opportunities