Paragon REIT, a retail real estate investment trust in Singapore, is likely to be privatised and delisted from the Singapore Exchange following a bid by its joint managers.
Paragon REIT Management and Times Properties, a unit of Cuscadean Peak Investments, have offered S$0.98 per unit of Paragon REIT under a proposed trust scheme of arrangement.
The offer price represents a 7.1% premium to the adjusted net asset value (NAV) and a 12.8% premium over the Paragon REIT’s 12-month volume-weighted average price, according to a disclosure.
The price also exceeds the REIT’s highest traded price over the past two years, offering unitholders what the offeror describes as “attractive value.”
Cuscaden Peak is jointly owned by CLA Real Estate Holdings and Mapletree Investments, each holding a 50% stake.
The company cited challenging market conditions, low trading liquidity, and limited growth prospects as key reasons for the move.
Paragon REIT has struggled with constrained access to capital markets, limited analyst coverage, and low institutional investor interest compared to its retail S-REIT peers.
Since its initial public offering in 2013, the REIT’s total assets have grown 1.3 times, significantly below the 2.9 times average growth seen across the sector.
A key concern is the REIT’s heavy reliance on Paragon Mall, an upscale property that accounts for 72% of its appraised value.
The mall faces rising competition from nearby redevelopments, while post-pandemic luxury spending remains subdued at 74% of 2019 levels.
“We recognise both the challenges and opportunities facing Paragon REIT and believe it is important that Paragon maintains its status as a premier upscale retail mall,” Leong Horn Kee, chairman of the REIT manager, said.
Cuscaden Peak indicated that a major asset enhancement initiative (AEI) would be necessary to maintain Paragon’s competitiveness, potentially costing S$300 million to S$600 million and taking three to four years to complete.
The AEI could introduce significant execution risks, including income volatility and market uncertainties, which the offeror argues are better managed in a private setting.
The scheme will require, among others, the approvals of unitholders holding not less than 75% of the voting rights of all unitholders present and more than 50% of the number uniholders representing at least 75% in value of the units held by unitholders present.
Cuscadean Peak and its subsidiaries holding 61.5% in Paragon REIT will abstain from voting on the scheme.
