SPH REIT to merge with MPACT or CICT?

Lifetime Membership Special Offer! When SPH shareholders approved the acquisition by Cuscaden Peak on 22 March 2022, the writing was on the wall that SPH REIT would be the next to be acquired. Indeed, the consortium subsequently announced the chain offer of SPH REIT at $0.9640 per unit on 29 April 2022. Should unitholders accept, reject or run for their lives?

Cuscaden Peak is a consortium that is made up of entities linked to Hotel Properties (40%), CapitaLand Group (30%) and Mapletree Investments (30%). Given that CapitaLand and Mapletree are majority-controlled by Temasek Holdings and are sponsors of S-REITs, what is the possibility of the assets of SPH REIT being injected into MPACT or CICT? In life, never say never. After all, the S-REIT sector is undergoing a wave of consolidation post-pandemic.

SPH REIT

Before we talk about life after the chain offer, let’s take a look at the unfolding chain offer. It should be noted that after adjusting for the 1QFY2022 and 2QFY2022 distributions, the offer price is actually $0.9372 per unit. At the point of writing, SPH REIT unit price is being traded at $0.945. In this regard, some unitholders may feel that they were given a raw deal. One member of SG Wealth Builder even enquired if a delisting is on the cards.

In this article, I will share my opinion on the chain offer and provide my assessment the possibility of SPH REIT being delisted from SGX. Before proceeding, investors should be aware that cash offer and delisting requirements come under two different rules – the former falls under Singapore Code on Take-Overs and Mergers while the latter falls under Section 295A(1) of the Securities and Futures Act 2001 of Singapore.

As at 1 June 2022, Cuscaden Peak had already obtained 51.96% of the total SPH REIT units, thereby crossing the Minimum Acceptance Condition (MAC). As per Singapore Code on Take-Overs and Mergers, the chain offer is declared unconditional. This means that Cuscaden Peak is obligated to make good its offer to those unitholders who had tendered their shares. For this group of unitholders, they can expect to receive payment within seven business days after the date of receipt of such valid acceptances of the chain offer.

For unitholders who had not accepted the chain offer, they should take note that the closing date for the chain offer will be extended from 5.30 p.m. (Singapore time) on 16 June 2022 to 5.30 p.m. (Singapore time) on 30 June 2022, or such later date(s) as may be announced from time to time by or on behalf of Cuscaden Peak. Therefore, there is still some time for unitholders to think carefully about the chain offer.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested in SPH REIT currently. Whether SPH REIT unit price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

A low-ball offer for SPH REIT?

I will be sharing my perspective from those who had not accepted the offer. On this note, I must stress that there is [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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4 thoughts on “SPH REIT to merge with MPACT or CICT?

  • June 7, 2022 at 11:27 am
    Permalink

    Thanks. I agree with your analysis.

  • June 8, 2022 at 9:24 pm
    Permalink

    Thank you for the post on SPH Reit.

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