On 29th April 2022, SPH REIT announced that Cuscaden Peak Pte Ltd will make a Chain Offer of S$0.9372 per unit for all units of SPH REIT.
What is a Chain Offer? The Chain Offer refers to a mandatory cash offer whereby Cuscaden Peak will pay unitholders of SPH REIT a minimum offer price for each unit. of the share.
How was the Offer Price Determined?
The minimum offer price for the Chain Offer is computed using the simple average of the daily volume-weighted average traded prices of the SPH REIT units from the latest 20 trading days prior to 29 October 2021.
The minimum offer price is worked out to be S$0.964 per unit. However, Cuscaden Peak can exercise its rights to reduce the Minimum Chain Offer Price by the aggregate of the 1QFY2022 Distribution and the 2QFY2022 Distribution. After the adjustment, this works out to be S$0.9372 per unit.
| S$ per SPH REIT Unit | |
| Minimum Chain Offer Price | 0.9640 |
| Adjustment for 1QFY2022 Distribution | (0.0124) |
| Adjustment for 2QFY2022 Distribution | (0.0124) |
| Offer Price | 0.9372 |
My Thoughts?
Currently, SPH REIT makes up 11.23% of my stock portfolio and 9% of my wife’s stock portfolio.
Honestly, I am unhappy about the offer price because it is 3.2% below the current last traded value of S$0.98. The minimum offer price is also close to the estimated book value of S$0.92 per unit which is not a premium offer.
Lesson Learnt
The acquisition of SPH by Cuscaden Peak has taught me an important lesson. That is when selecting a REIT, the Sponsor is also important. When the Sponsor runs into trouble, the REIT will also get into trouble.
SPH REIT is a quality REIT with assets that I like such as Paragon Mall and Clementi Mall. In my opinion, this is a fair deal but not a good deal for investors.
When the stock market opens, I may sell SPH REIT if the price is higher than the minimum offer price.