Macau Property Opportunities disposal plan is on-track

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