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Paragon Reit unitholders to vote on proposed privatisation on Apr 22
PrimePartners, the independent financial adviser appointed by the Reit for the privatisation offer, says the offer is fair and reasonable
[SINGAPORE] Unitholders will vote on the proposed privatisation of Paragon Reit : SK6U 0% in an extraordinary general meeting (EGM) and scheme meeting on Apr 22, the board said in a bourse filing on Thursday (Mar 27).
If approved, unitholders will receive S$0.98 per unit from the offeror Times Properties.
PrimePartners, the independent financial adviser (IFA) appointed by the real estate investment trust (Reit) for the privatisation offer, said that the offer was fair and reasonable, having considered the factors set out in its letter to the Reit&rsquo s independent directors and trustee.
The IFA said that the scheme consideration of S$0.98 per unit represented a slight premium of 4.4 per cent over the Reit&rsquo s net asset value (NAV) per unit, and a premium of 7.1 per cent over its adjusted NAV per unit.
The IFA also noted that the scheme consideration represented premiums of more than 10 per cent over the units&rsquo volume-weighted average prices spanning various lookback periods of up to two years.
It added that the scheme presents an opportunity for unitholders to exit their investments due to low trading liquidity and odd lots.
The scheme is contingent on the approval of amendments made to the Paragon trust deed, intended to facilitate the implementation of the scheme, said the board, acting as the Reit&rsquo s manager. These amendments, which will be voted on during the EGM, would require that 75 per cent of total votes cast approve of the resolution.
Should unitholders approve the amendments, the scheme resolution will then be voted on, the board said. This resolution would require that 50 per cent of total voting minority unitholders, as well as 75 per cent in value of the units held by voting minority unitholders, approve the scheme.
The offeror Times Properties is a wholly owned subsidiary of Cuscaden Peak Investments, whose parent Cuscaden Peak is partially owned by a subsidiary of Mapletree Investments &ndash making it part of the Temasek investment stable. Times Properties intends to acquire all units in the Reit held by unitholders other than Cuscaden Peak and its subsidiaries.
If the scheme is passed, the privatisation is expected to be effective on May 26, and unitholders will be paid the scheme consideration on Jun 4. The scheme consideration will not be reduced by the H2 FY2024 distribution per unit of S$0.0233, the filing said.
Majority unitholders Cuscaden Peak and its subsidiaries, which own 61.5 per cent of the Reit&rsquo s units, will abstain from voting, the manager said. Therefore, the outcome of the privatisation scheme would be decided solely by minority unitholders.
who dont want higher price? look at sinarmas pathetic offer, that is low ball to shareholders
Not accepting, as its a lowball price and they can pay more. They should do a Public Offer instead. Schemes of Arrangement are not advantageous.
Good to see the update from IFA. Also picked up from Lim & Tan report this morning -
Paragon REIT&rsquo s market cap stands at $2.8bln and the deal values paragon at 1.07x price/Adjusted NAV. Given that the IFA has deemed the offer fair and reasonable, along with the opportunity to receive the previously announced dividend, and considering that this offer values Paragon REIT above its current book valuations and at its highest trading price, we advise shareholders to accept the offer. We hereby also warn that should this offer fail, there is a significant chance a equity fund raising exercise might occur despite Paragon&rsquo s relatively low gearing of 35.3%. This is because even the lower end of the estimated CapEx of S$300mln to S$600mln far exceeds it&rsquo s available bank facilities of S$225mln and current cash balances, and that gearing is likely to cross 40%. As such, we recommend investors to vote in favour of the scheme.
Paragon REIT&rsquo s market cap stands at $2.8bln and the deal values paragon at 1.07x price/Adjusted NAV. Given that the IFA has deemed the offer fair and reasonable, along with the opportunity to receive the previously announced dividend, and considering that this offer values Paragon REIT above its current book valuations and at its highest trading price, we advise shareholders to accept the offer. We hereby also warn that should this offer fail, there is a significant chance a equity fund raising exercise might occur despite Paragon&rsquo s relatively low gearing of 35.3%. This is because even the lower end of the estimated CapEx of S$300mln to S$600mln far exceeds it&rsquo s available bank facilities of S$225mln and current cash balances, and that gearing is likely to cross 40%. As such, we recommend investors to vote in favour of the scheme.
finally got updates liao. scheme doc on sgx this morning. fair and reasonable as expected and board recommend to vote in favour. egm on 22 apr
HB8289 ( Date: 13-Mar-2025 09:23) Posted:
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https://www.paragonreit.com.sg/proposed-privatisation
Any updates?
Any updates?
When can receive the money?
Let' s see... ...
meanwhile, just wait
meanwhile, just wait
finjungle ( Date: 15-Feb-2025 19:59) Posted:
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Ha Ha Ha isn' t it a forgone conclusion?
n3wbie ( Date: 15-Feb-2025 17:05) Posted:
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Lets see what the ifa says, whether this is fair and reasonable?
Joelton ( Date: 15-Feb-2025 13:32) Posted:
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Paragon Reit appoints PrimePartners as IFA for privatisation offer
It will advise the independent directors of the Reit&rsquo s manager to make a recommendation to minority unitholders on the potential deal
PARAGON Real Estate Investment Trust (Reit) has appointed PrimePartners Corporate Finance as the independent financial adviser (IFA) for its privatisation offer, said the board via a bourse filing on Friday (Feb 14).
The board &ndash which is acting as the Reit&rsquo s manager &ndash along with Times Properties had announced on Tuesday that it is looking to take the Reit private through a trust scheme of arrangement, for S$0.98 per unit, thereby valuing the company at S$2.8 billion.
Units of Paragon Reit fell 0.5 per cent or S$0.005 to close at S$0.99 on Friday, before the latest bourse filing was released.
Times Properties is a wholly owned subsidiary of Cuscaden Peak Investments, whose parent Cuscaden Peak is partially owned by a subsidiary of Mapletree Investments &ndash making it part of the Temasek stable of investments.
The offeror is looking to acquire all units in Paragon Reit : SK6U -0.5% held by unitholders other than Cuscaden Peak and its subsidiaries.
The IFA would advise the independent directors of the Reit&rsquo s manager to make a recommendation to its minority unitholders on the privatisation offer, read the filing.
A document containing full details of the offer, including the recommendation of the independent directors, the advice of the IFA, as well as an extraordinary general meeting and a meeting on the deal, would be sent out to unitholders.
The offer price represents a 10.1 per cent premium to the counter&rsquo s last transacted price of S$0.89 on Monday. It also represents a premium over the volume weighted adjusted price &ndash of 10.9 per cent for one month, 11.6 per cent for three months and 12.8 per cent for 12 months.
Cuscaden Peak Investments and Paragon Reit had said on Tuesday that the scheme would allow unitholders &ldquo to realise their investment in cash at an attractive valuation with no trading costs&rdquo , and enable them &ldquo to immediately reinvest proceeds into other opportunities&rdquo .
They noted that Paragon Reit has one of the lowest free floats among its retail Singapore Reit peers, and has historically experienced low trading liquidity.
The offeror believes that the Reit &ldquo faces trading conditions that will continue to constrain its potential for sustained growth and long-term value creation&rdquo .
The premier status of Paragon, which is the major contributor of portfolio value, is being challenged, with increased competition from upcoming retail malls in the surrounding catchment as well as existing malls undergoing major upgrades. Rival malls include voco Orchard, Forum The Shopping Mall and Tanglin Shopping Centre.
The offeror believes that a major asset enhancement initiative (AEI) is necessary for Paragon &ldquo to maintain its long-term competitiveness&rdquo .
However, the offeror pointed out that given the execution risks associated with a significant potential AEI, such as uncertainties around cost and timing, this would be &ldquo more suitably carried out in a private setting&rdquo .
Temasek-backed Cuscaden to privatise Paragon Reit at S$0.98 per unit
Offer price represents 10.1% premium to counter&rsquo s closing price of S$0.89 on Feb 10
TIMES Properties, a wholly-owned subsidiary of Cuscaden Peak Investments, is looking to take Paragon Real Estate Investment Trust : SK6U +11.24% (Reit) private by way of a trust scheme of arrangement, for S$0.98 per unit.
The offeror is looking to acquire all units in Paragon Reit held by unitholders, other than Cuscaden Peak and its subsidiaries.
Cuscaden Peak Investments is wholly owned by Cuscaden Peak, which is in turn owned equally by Adenium, a wholly-owned subsidiary of CLA Real Estate, and Mapletree Fortress, an indirect wholly-owned subsidiary of Mapletree Investments. Both CLA and Mapletree are part of the Temasek Holdings stable.
In 2022, investment vehicle Cuscaden Peak acquired the then listed Singapore Press Holdings (SPH), which was mainly a property business after spinning off its media assets. SPH was then renamed Cuscaden Peak Investments.
Cuscaden Peak acquired about 61 per cent stake in SPH Reit as part of a chain offer following the privatisation of SPH. SPH Reit was renamed Paragon Reit with effect from Jan 3, 2023.
As at the joint announcement date on Tuesday (Feb 11), Times Properties holds directly and indirectly approximately 21.5 per cent of the issued units of Paragon Reit.
The directors of Times Properties include Gerald Yong, who is also the chief executive and director of Cuscaden Peak, as well as Chin Yean Cheng, chief financial officer of CapitaLand Development.
The offer price represents a 10.1 per cent premium to the counter&rsquo s last transacted price of S$0.89 on Monday. It also represents a premium over the volume weighted adjusted price &ndash of 10.9 per cent for one month 11.6 per cent for three months and 12.8 per cent for 12 months.
Long-term competitiveness
Cuscaden Peak Investments and Paragon Reit said the scheme would allow unitholders &ldquo to realise their investment in cash at an attractive valuation with no trading costs&rdquo , and enable them &ldquo to immediately reinvest proceeds into other opportunities&rdquo .
They noted that Paragon Reit has one of the lowest free floats among its retail Singapore Reit (S-Reit) peers and has historically experienced low trading liquidity. Its total assets have grown 1.3 times since its initial public offering in 2013, compared to the average of 2.9 times for other retail S-Reits, they added.
The offeror believes that Paragon Reit &ldquo faces trading conditions that will continue to constrain its potential for sustained growth and long-term value creation&rdquo .
The Reit&rsquo s portfolio comprises three assets and it depends &ldquo heavily&rdquo on Paragon, which accounts for 72 per cent of the portfolio value. However, the mall&rsquo s premier status is being challenged with increased competition from upcoming retail malls in the surrounding catchment, as well as existing malls undergoing major upgrades. This includes voco Orchard, Forum The Shopping Mall and Tanglin Shopping Centre.
&ldquo In addition to these competitive pressures, a persistent slowdown in luxury spending post-pandemic, with international luxury spending at 74 per cent of its 2019 peak, has also weighed on Paragon&rsquo s performance,&rdquo the statement said.
The Reit also owns Clementi Mall in Singapore, and in Australia, has a 50 per cent freehold interest in Westfield Marion Shopping Centre.
The offeror believes that a major asset enhancement initiative (AEI) is necessary for Paragon &ldquo to maintain its long-term competitiveness&rdquo . The mall, which opened in 1986, last went through a major AEI in 2009 at a cost of S$82 million. At the time, 42,000 square feet of space was added to the mall.
However, the offeror pointed out that given the execution risks associated with a significant potential AEI, such as uncertainties around cost and timing, this would be &ldquo more suitably carried out in a private setting&rdquo .
The proposed AEI would potentially take up to four years to complete, and may include upgrades to Paragon&rsquo s facade and interiors, reconfiguration of its spaces and improvements to connectivity, among others.
The mall is likely to retain its position as an upscale one, said Yong, the chief executive of Cuscaden Peak, during a media briefing on the offer on Tuesday.
He estimated that the capital expenditure for Paragon&rsquo s AEI would range between S$300 million and S$600 million, or between 10 and 21 per cent of Paragon&rsquo s FY2024 appraised value. The estimation is based on the capital expenditure per square foot of precedent AEIs by other Reits and Paragon&rsquo s gross floor area.
Based on these parameters, and had the AEI occurred in FY2024, Paragon Reit&rsquo s pro forma FY2024 adjusted distribution per unit (DPU) would have fallen to between S$0.0163 and S$0.0355. This represents a drop of between 21.4 and 64 per cent from the FY2024 adjusted DPU of S$0.0452.
On whether unitholders should have the option to partake in the AEI, Yong reiterated that there are many uncertainties involved in the asset enhancement plans. These include the timeframe of the AEI, and market considerations such as rental cycles.
&ldquo Because of all these uncertainties, it is very difficult for the sponsor and offeror to give a very precise underwriting&hellip We just don&rsquo t feel it&rsquo s suitable for the Reit unitholders to come along with us,&rdquo he said.
He noted that the proposed scheme of arrangement will be submitted to the unitholders of Paragon Reit for voting, with the offeror and its concert party group abstaining from voting.
In the event that the scheme is not approved by unitholders, the offeror said it hopes to continue engaging with Paragon Reit to consider an appropriate plan, as it believes that an AEI &ldquo is critical for Paragon to remain competitive&rdquo .
On whether this was the final offer, Andy Neo, the director for Asia-Pacific Real Estate Investment Banking at Citigroup Global Markets &ndash which is the financial adviser to the offeror &ndash declined to speculate. He noted that he hoped unitholders will be supportive of the offer put forth for consideration.
Yong added, in response to another question, that while it is possible for Paragon Reit to return to the public market down the road, it was &ldquo premature&rdquo to speculate on the possibility for now.
Units of Paragon Reit closed 0.6 per cent or S$0.005 lower at S$0.89 on Monday, before a trading halt was called on Tuesday morning.
Haha bro, this is almost 12 years ago!
MrBear12 ( Date: 12-Feb-2025 07:05) Posted:
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Just looking back at first coverage of this stock on SJ.
This did not take off as suggested.
But never mind, some we win, some we don't
Octavia ( Date: 27-Aug-2013 09:35) Posted:
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Ha nice one. At least this was a decent offer that allows shareholders to go makan and jalan jalan.
MrBear12 ( Date: 11-Feb-2025 21:50) Posted:
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Thanx newbie.
I go see starhill. Its global I heard. But not so good performance currently. Maybe because Ngee Ann and Wisma are situated on not auspicious land that used to be a graveyard.
Maybe, I travel further up the road to ION Orchards or lower down the road to Plaza Singapura.
Don' t be surprised to see a big brown beast having honey ice cream at one of these malls.
Well, I am more at peace losing my prized possession held since it was made available to a bear.
I go see starhill. Its global I heard. But not so good performance currently. Maybe because Ngee Ann and Wisma are situated on not auspicious land that used to be a graveyard.
Maybe, I travel further up the road to ION Orchards or lower down the road to Plaza Singapura.
Don' t be surprised to see a big brown beast having honey ice cream at one of these malls.
Well, I am more at peace losing my prized possession held since it was made available to a bear.
n3wbie ( Date: 11-Feb-2025 21:45) Posted:
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Across the road to Ngee Ann City and Wisma with Starhill?
MrBear12 ( Date: 11-Feb-2025 21:31) Posted:
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Sad one for me because i lose both paragon and clementi malls.
where to go from here now?
where to go from here now?
Good exit for me.
Fair deal to protect shareholders from risk of AEI works on Paragon.