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End of Suntec REIT stock rally?

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From $2.25 in January 2018 to $1.66 in June 2018, Suntec REIT stock crashed in bizarre fashion and in the process, roasted many investors alive within the span of six months. The incredible rally of Suntec REIT stock started in 2016 and gained pace rapidly in 2017 on the back of market rumours of potential takeover by sponsor, ARA Asset Management. What on earth has happened? Is the sky falling for Suntec REIT stock or will it rise like phoenix from the ashes?

Market speculation on Suntec REIT being privatized peaked in late December 2017, a period of time when a slew of local homegrown companies were exiting Singapore Exchange bourse. Big names like Eu Yan Seng, Tiger Airways, SMRT, Popular Holdings and Keppel Land were just a few of many local stocks that had been delisted from SGX in the past two years, wiping off billions of liquidity from the stock bourse.

At a point of time, Suntec REIT seemed destined to be the next counter to be privatized. As a result, this sparked a frenzy rally in Suntec REIT stock price.

Suntec REIT

Well, I suppose in the stock market, the old saying of “Man proposes, God disposes” still holds true. The market rumours remained as market rumours after all and those who had bought at the peak of Suntec REIT stock price must be slapping their foreheads at their moment of madness.

However, if you have bought Suntec REIT at IPO price of $0.97 in 2004, you would have made a tidy profit from the price appreciation and DPUs. Thus far, Suntec REIT has a stellar track record of DPU, which totalled $1.26 per unit. All in all, the return would have been at a mighty 200% (with unit price increase factored in).

Suntec REIT stock rally a false dawn?

In my opinion, the chance of a Suntec REIT buyout by ARA is quite low. Of course, I could be wrong. In life, never say never. But then again, ARA Asset Management is not the largest shareholder of Suntec REIT. The largest shareholder is Tang Yigang, founder of Tang Dynasty. Tang owns 17.41% of Suntec REIT stocks while ARA Asset Management holds only 7.05%.

Perhaps the successful buyout offer of Croesus Retail Trust by Blackstone in September 2017 had given investors much hope that similar deal would materialize for Suntec REIT. Some may have bought into Suntec REIT stock, with the expectation of explosive price appreciation on the back of buyout offer. Nonetheless, it is important to put things into context.

Suntec REIT belongs to another league as compared to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: August 30, 2018 — 10:01 pm

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