![Macau Property Opportunities disposal plan is on-track - Macau Property Opportunities Fund (MPO) reported on the progress of its gradual wind-up in its annual report for the period ending 30 June 2018. The chairman reported that the shareholders' decision at the recent EGM to extend the company's life until the end of 2019 placed them in a stronger position to negotiate further satisfactory disposals. This, he pointed out, enhances the potential realisation of MPO's remaining assets, supported by a continuing market recovery in Macau. In March, the company sold its retail redevelopment site, Senado Square, for HK$800 million (c.US$102 million) - a gain of 541% over its acquisition cost. The subsequent distribution to shareholders, equivalent to 50 pence per share, represented 62% of the net profit from the sale. Highlights Fund performance · the company's portfolio value appreciated 2.3% over the year to US$338.4 million. · adjusted NAV grew 4.5% year-on-year to US$260.6 million, equating to US$3.41 (258 pence[2]) per share. · the company's share price rose 24% over the year, representing a 25% discount to adjusted NAV per share. Capital management · Consolidated cash balance (including deposits with lenders) as at 30 June 2018 was US$88.2 million. · Overall gross borrowings were reduced to US$148 million and the loan-to-value ratio improved to 35%. · Approximately US$50.5 million (£38.2 million) was distributed post year-end to shareholders, by way of a compulsory redemption of shares. This represented 62% of the net profit from the divestment of Senado Square, equivalent to £0.50 per share. In the background, the portfolio remains competitive and relevant During the year, ongoing asset enhancement initiatives at the company's flagship asset, The Waterside, have seen the property achieve stable occupancy and higher rental values as it retains its position as Macau's premier residential asset. The company has also embarked on a reconfiguration programme for several large units at The Fountainside, which will cater to increasing demand for more compact homes. These initiatives demonstrate continued efforts to meet changing consumer needs in the property market. Macau's gross domestic product is expected to grow by 5.8% this year and 3.9% in 2019. In his statement, the chairman, Chris Russell noted that they are mindful of rising global risks, particularly escalating US-China trade tensions and a weakening yuan, which are threatening to endanger the recovery of Macau's crucial VIP gaming segment. The possibility of China's central government further restricting capital outflows could also be detrimental to the company's divestment strategy. MPO : Macau Property Opportunities disposal plan is on-track](https://quoteddata.com/wp-content/uploads/2018/09/auto-draft-40-680x499.jpg)
Macau Property Opportunities (MPO) has announced its annual results for the year ended 30 June 2023. During the first six months of the financial year, Macau was subject to strict dynamic zero-COVID regulations, in lockstep with mainland China. At the beginning of 2023, however, COVID controls were rapidly relaxed, triggering a dramatic economic recovery which has seen both strong growth in gross gaming revenues and significantly increased numbers of visitors to Macau.
MPO’s chairman, Mark Huntley, says that the strata sales programme of selected apartments in the Waterside is delivering results and has produced US$44.3m of sale proceeds which has reduced MPO’s overall level of debt from US$131m to US$105m in the last financial year. He comments that the environment in which MPO operates has remained difficult; concerns have surfaced regarding China’s economic performance and inflationary pressures have driven global interest rates higher, which has made executing MPO’s divestment strategy challenging. Huntley says that they are continuing to assess the market to apply the optimal divestment strategy for each of MPO’s remaining property assets, including a whole portfolio disposal. Reducing MPO’s debt levels continues to be the near term focus.
Key financial highlights are as follows:
- On a like-for-like basis, MPO’s portfolio value declined 1% over the year to US$200.5m.
- Adjusted NAV was US$ 90.4m, which translates to US$1.46 (116 pence) per share, a 12.6% decrease year-on-year.
- IFRS NAV was US$65.7m or US$1.06 (84 pence2) per share, a 15.3% decrease YoY.
Capital management:
- As at 30 June 2023, MPO’s balance sheet held assets worth a total of US$182.6m, against combined liabilities of US$116.9m.
- The company ended the financial year with a consolidated cash balance (including deposits with lenders) of US$6.7m.
- As at 30 June 2023, gross borrowings stood at US$105.6m, which translates to a loan-to-value ratio of 50.9%.
Portfolio highlights
The Waterside
Since the launch of The Waterside strata sales programme in Q2 2022, the company has achieved total divestments of US$44.3m (HK$348m) through the sale of 16 units. The units were sold at an average value of 65% above cost, and an average 8% discount to their latest average valuations. The completion of 13 units occurred during the period under review. Of the three further sales of units, two have settled and one completion is scheduled for early October. Tenant occupancy increased by 19% YoY to 46% and the average rental remains at US$2.2 per square foot per month.
The Fountainside
Two duplexes at the property have been reconfigured into three smaller units and two car-parking spaces. Occupancy permits are expected by the end of 2023, clearing the way for sales. For the four villas, marketing efforts are expected to increase investor interest as we enter 2024.
Penha Heights
During the period, Macau’s zero-COVID measures disrupted on-site viewings and weighed on investor sentiment. However, since Macau’s zero-COVID measures were lifted in early 2023, marketing activity for the property has been stepped up.