Temasek-backed entities have made a S$2.78bn (€2bn) take-private offer for Singapore-listed retail trust Paragon REIT.
Cuscaden Peak and its subsidiaries, which currently own 61.5% of Paragon REIT, have offered unitholders S$0.98 in cash per unit, representing a 7.1% premium to the retail trust’s net asset value and a 34.2% premium to its current trading multiples.
In addition, the offeror has undertaken to pay a previously declared 2.33 Singapore cents per unit distribution.
Paragon REIT has suffered from low free float and trading liquidity, lack of institutional interest and limited analyst coverage since listing in 2013. Its portfolio has grown 1.3 times since its initial public offering, compared with the average of 2.9 times for its listed peers.
Up to 72% of its value comes from the 30-year-old Paragon shopping centre located in Singapore’s tourist thoroughfare, Orchard Road. Cuscaden said the mall needed capital expenditure, estimated to cost between S$300m and A$600m to remain competitive in the retail strip.
Gerald Yong, CEO of Cuscaden Peak Investments, said: “Given the increasingly competitive retail landscape, we believe that a major potential AEI [asset enhancement initiative] is necessary to maintain Paragon’s competitiveness as a leading upscale retail mall in Singapore.”
Leong Horn Kee, chair of Paragon REIT Management, said the board recognises both the challenges and opportunities facing Paragon REIT, adding that it believes the proposed price is a good offer and recommends that unitholders consider it.
For the bid to be successful, it must be accepted by 50% of the number of unitholders representing at least 75% in value of the units held by unitholders present and voting in person or by proxy at the scheme meeting due in April.
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