SGX: SK6U
Paragon REIT is leading a wave of S-REIT privatisations after unitholders voted overwhelmingly on April 22 in favour of amending its trust deed and approving a scheme of arrangement. With both resolutions crossing the 75% approval threshold, the final court hearing is set for May 8. If all goes through, trading ends around May 14, with delisting expected by June 6. The scheme offers $0.98 per unit, a premium to its FY2024 NAV of 93.8 cents, and is not reduced by its 2HFY2024 DPU of 2.33 cents.
SGX: ACV
Frasers Hospitality Trust (FHT) is under renewed scrutiny after announcing a fresh strategic review on April 23. A previous $0.70 per stapled security privatisation attempt in 2022 failed narrowly with 74.88% support. As of March 31, FHT’s NAV was 64 cents, with a 1HFY2025 DPS of 1.0257 cents. DBS Group Research suggests privatisation is likely, citing asset redevelopment potential. Analysts speculate a new offer could be pitched near $0.68, though macroeconomic uncertainties loom.
SGX: AW9U
First REIT is exploring strategic options following a non-binding letter of intent from Siloam International Hospitals to buy its Indonesia hospital assets. The board appointed Citigroup Global Markets Singapore to oversee a wide-reaching review, contacting over 60 parties to assess divestment, partnerships, or joint ventures. As at March 31, NAV stood at 27.37 cents, with units trading at 0.97 times NAV.
📉 Valuation Gap and Market Pressure
Mapletree Pan Asia Commercial Trust (MPACT) is trading at a 32% discount to its net asset value (NAV) of S$1.78, indicating significant market pressure.
This discount is largely attributed to its exposure to North Asia, particularly following its 2022 merger with Mapletree North Asia Commercial Trust.
In contrast, MPACT’s Singapore-focused peers, such as CapitaLand Integrated Commercial Trust (CICT) and Frasers Centrepoint Trust (FCT), are trading near their NAVs, highlighting MPACT’s valuation gap.
🏢 Portfolio Performance: VivoCity vs. Festival Walk
VivoCity, MPACT’s flagship mall in Singapore, delivered a strong net property income (NPI) of S$176.6 million, up 18.7% year-on-year, and tenant sales exceeded S$1 billion for the third consecutive year.
Conversely, Festival Walk in Hong Kong underperformed, with falling sales and a 6.9% decline in rental reversion, contributing to the overall valuation discount.
These two assets, VivoCity and Festival Walk, comprise nearly 50% of MPACT’s portfolio, making their performance critical to the trust’s overall health.
🔄 Strategic Options for MPACT
Analysts suggest that MPACT should consider divesting Festival Walk to reduce its exposure to the volatile North Asian market and focus more on the stable Singapore market.
Alternatively, pursuing a merger with a Singapore-centric REIT could be beneficial:
Suntec REIT: With S$11.8 billion in assets, 78% of which are in Singapore, Suntec REIT trades at an even wider NAV discount, offering potential synergy and scale.
CICT: Boasting a S$26 billion portfolio that is 95% Singapore-centric, merging with CICT could elevate MPACT’s valuation. However, this would require Mapletree Investments, MPACT’s sponsor, to weigh the loss of recurring management fees.
💡 Conclusion
To address its valuation gap and enhance investor confidence, MPACT may need to realign its portfolio strategy by focusing more on Singapore assets, either through divestment of underperforming overseas assets like Festival Walk or by merging with a Singapore-focused REIT.
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