Paragon Reit appoints PrimePartners as independent financial adviser for privatisation offer

SINGAPORE – Paragon Real Estate Investment Trust (Reit) has appointed PrimePartners Corporate Finance as independent financial adviser (IFA) for its privatisation offer, said the board via a bourse filing on Feb 14.

The board – which is acting as the Reit’s manager – along with Times Properties had announced on Feb 11 that it is looking to take the Reit private through a trust scheme of arrangement, for 98 cents per unit, thereby valuing the company at $2.8 billion.

Units of Paragon Reit fell 0.5 per cent or 0.5 cent to close at 99 cents on Feb 14, 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 – making it part of the Temasek stable of investments.

The offeror is looking to acquire all units in Paragon Reit held by unit holders other than Cuscaden Peak and its subsidiaries. The IFA would advise the independent directors of the Reit’s manager to make a recommendation to its minority unit holders 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 unit holders.

The offer price represents a 10.1 per cent premium to the counter’s last transacted price of 89 cents on Feb 10. It also represents a premium over the volume-weighted adjusted price – 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 Feb 11 that the scheme would allow unit holders “to realise their investment in cash at an attractive valuation with no trading costs”, and enable them “to immediately reinvest proceeds into other opportunities”.

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 “faces trading conditions that will continue to constrain its potential for sustained growth and long-term value creation”.

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 “to maintain its long-term competitiveness”. 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 “more suitably carried out in a private setting”.

THE BUSINESS TIMES