SINGAPORE: A unit of Cuscaden Peak Pte is seeking to take Paragon real estate investment trust (REIT) private, in a growing sign of the headwinds facing Singapore’s real estate investment trust sector.
Cuscaden, which is backed by units of state investor Temasek Holdings Pte, is offering to privatise Paragon-REIT for S$0.98 per unit in cash via its wholly-owned subsidiary Cuscaden Peak Investments, according to a stock exchange filing yesterday.
The offer represents a 7.1% premium to the firm’s adjusted net asset value.
The REIT “has faced low free float and trading liquidity, as well as limited analyst coverage and institutional investor flow” compared with its other retail REIT peers in Singapore, according to the announcement.
This “constrained its ability to access capital markets and expand its portfolio,” it added.
Paragon-REIT, which exchanged hands at S$0.89 per share before its trading was halted yesterday, is down nearly 22% from its pre-pandemic peak.
Its crowning asset is its namesake luxury mall in Singapore’s Orchard Road shopping belt, which represents 72% of the REIT’s appraised value.
Cuscaden said that Paragon’s “upscale status is being challenged by malls undergoing major upgrades and upcoming redevelopments” in the strip, which are expected to significantly ramp up competition.
The mall is also being hit by a “persistent slowdown in luxury spending,” it added. — Bloomberg
