SINGAPORE (Dec 5): Mapletree North Asia Commercial Trust’s (MNACT) Festival Walk shopping mall is expected to remain shuttered until the first quarter of next year after incurring “extensive damage” in mid-November amid escalating violence in the Hong Kong protests, the manager announced after market close on Dec 4.

The Kowloon Tong property, described as an “anchor asset” for MNACT, has been closed since Nov 13.

“There are major recovery and repair works to be carried out on multiple levels and locations within the mall,” the manager said in a statement. “All efforts are being made to re-open the mall as soon as possible and we are working closely with our consultants and contractors to re-open, either partially or fully, in the first quarter of calendar year 2020.”

It added that Festival Walk’s office tower has re-opened since Nov 26, and that rental collection from the office tenants has also resumed.

Hong Kong’s then-largest shopping mall when it was first opened in 1998, the seven-storey complex was ravaged by protestors on Nov 12.

The angry mob torched a Christmas tree in the mall and set fire to the office lobby, and also smashed glass panels at the entrances to the property as well as balustrades on various levels of the mall.

See: MNACT falls 4.9% as Hong Kong protestors torch key asset Festival Walk

The violence came just days after several individuals were injured in altercations between Hong Kong protestors and police that broke out at the mall on Nov 10.

“While the loss of retail and office revenue as well as property damage are covered under the insurance policies, the assessment of the quantum of revenue loss and property damage recoverable by insurance claims is currently underway and the timing of receiving the claims has yet to be determined,” the manager said.

In the meantime, to help mitigate the impact of a distribution per unit (DPU) that is expected to be “significantly lower” as a result of the loss in revenue at Festival Walk, the manager has announced a plan to implement a top-up to the distributable income for the next three quarters – 3QFY19/20 ending December 2019, 4QFY19/20 ending March 2020, and 1QFY20/21 ending June 2020.

"The distribution top-up is to enable a certain level of distributable income to be made until such time the loss of revenue is recovered through the insurance claims," the manager said.

In the latest 1HFY2020 ended September, Festival Walk accounted for 61.7% of MNACT’s net property income.

Based on approximately 40% of the Festival Walk retail revenue, the distribution top-up amount will be included in the capital component of the distributable income payable.

The distribution top-up will be funded by external borrowings, which will be repaid once the insurance claims proceeds are received, the manager added.

Since the start of November, units in MNACT have fallen more than 10% to close at $1.16 on Dec 4, before the announcement.

See: MNACT continues to slide as Festival Walk mall in Hong Kong remains closed after 'extensive damage'

As at 12pm on Dec 5, units in MNACT are trading 1 cent higher at $1.17.