SINGAPORE (Nov 13): Mapletree North Asia Commercial Trust (MNACT) appears to be the latest casualty of the Hong Kong protests, as protestors set the REIT’s anchor asset, Festival Walk, on fire on Tuesday night. 

Festival Walk reportedly suffered “extensive damage” as Hong Kong entered a third consecutive day of chaos. Violence has escalated following five months of unrest, resulting in a night of intense battles between protestors and riot police.

In a regulatory filing before market open on Wednesday, the manager of MNACT says a few groups of protestors had smashed the glass panels at entrances to the property, including the office lobby and balustrades on various levels of the mall, on the night of Nov 12. 

“They also set fire to the Christmas tree within the mall, as well as the office lobby,” the manager says. It adds that the fires were eventually put out, and that there were no report of injuries. 

Amid the escalating city-wide disruptions, Festival Walk, which had shut its doors since 2pm on Nov 12, and will remain closed on Wednesday. 

The manager says it is assessing the damage and will provide an update in due course.

The counter opened 4.1% lower at $1.17 on Wednesday. As at 11.36am, units in MNACT are trading 6 cents lower, or 4.9% down, at $1.16. 

With some 19.8 million shares changing hands, the REIT was also one of the most heavily traded counters on the Singapore Exchange before the mid-day break on Nov 12. 

The Festival Walk shopping mall in Hong Kong is MNACT’s key asset. In the latest 2Q20, the mall accounted for some 62% of the REIT’s total net property income.

The mall had been forced to close early on three consecutive days before today, after altercations broke out at the property on Nov 10, which resulted in some injuries.

In a Nov 11 report, DBS Group Research’s lead analyst Derek Tan noted that Festival Walk has been the source of strong growth in cashflows for MNACT.

See: DBS remains bullish on MNACT as Festival Walk gets dragged into Hong Kong unrest

“We note that when the Hong Kong protests began in June 2019, Festival Walk had been relatively unscathed from the various skirmishes across the city which were largely confined to the streets,” said Tan. 

“Similar to other REITs like SPH REIT or Mapletree Commercial Trust where performance ‘rides on’ a key asset in their respective portfolios, we believe it may be the right move for MNACT to gain new growth thrusts by diversifying its earnings base to other income sources or geographies,” he added. 

Tan tells The Edge Singapore that investors have generally stayed cautious on MNACT, highlighting how its share price YTD which has displayed a marginal 1.75% increase. 

"I feel given this fresh news, the stock will remain sideways for now. Value hunters may only come in towards the 7% yield handle in our view, which is close to current levels," says Tan.