[SINGAPORE] Unitholders of Paragon Real Estate Investment Trust (Reit) approved the scheme resolution proposed by Cuscaden Peak’s Times Properties to take the trust private. Its delisting is expected on Jun 6, subject to regulatory approval.
During the scheme meeting on Tuesday (Apr 22), 1,000 unitholders or around 82.8 per cent of those present and voting, agreed to the privatisation offer. This represented about 97.6 per cent of units, well above the 50 per cent required of total voting minority shareholders, as well as the required 75 per cent in value of units.
The scheme resolution was also contingent on the approval of amendments made to the Paragon trust deed. These amendments, which were also voted on during an extraordinary general meeting held the same day, drew 98.8 per cent of support, surpassing the 75 per cent required to push through with it.
Paragon Reit unitholders will receive the scheme consideration of S$0.98 a share in cash on or around Jun 4.
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Independent financial adviser (IFA) PrimePartners previously described the privatisation offer of S$0.98 per unit as fair and reasonable, and noted that it represented a slight premium of 4.4 per cent over the Reit’s net asset value (NAV) per unit, and a premium of 7.1 per cent over its adjusted NAV per unit.
The IFA said the scheme consideration also represented premiums of more than 10 per cent over the units’ volume-weighted average prices spanning various look-back periods of up to two years.
Cuscaden Peak had made an offer to privatise the trust in February, noting that it had the lowest free floats among its retail Singapore Reit (R-Reit) peers, and had historically experienced low trading liquidity.
Total assets have grown 1.3 times since the Reit’s creation as SPH Reit at its initial public offering in 2013, compared to the average of 2.9 times for other retail S-Reits, Cuscaden added. Its cash offer of S$0.98 per unit values the Reit at S$2.8 billion.
Still, the manager noted in a bourse filing on Apr 17 that it had tried to address these issues. For instance, it undertook an equity issuance of S$164.5 million in December 2019, along with the acquisition of a 50 per cent interest in an Australian shopping centre, which resulted in an increase of its free float to about 38.5 per cent.
“Recent market conditions, such as the Covid-19 pandemic and the unavailability of assets with accretive returns limited Paragon Reit’s acquisition of quality assets, which may have resulted in the limited increase (in its free float),” said the manager.
The presence of “many long-term unitholders” could be another factor, given that the Reit has been consistently paying annual distributions of over S$0.05 since its listing, save for 2020, when the Reit was affected by the pandemic, it added.
The scheme would therefore allow unitholders “to realise their investment in cash at an attractive valuation with no trading costs”, and enable them “to immediately reinvest proceeds into other opportunities”, said Cuscaden and Paragon Reit.
