Reit mergers bring scale and headaches to Singapore
Real estate investment trusts are the mainstay of Singapore listings, a rare example of liquidity and foreign interest in an otherwise dull local bourse. Two contrasting mergers tell intriguing stories about where the Reit market goes from here.
Two real estate investment trust (Reit) mergers tell quite contrasting stories in a vitally important sector for Singapore.
One is a combination of two leading trusts in the CapitaLand stable: CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT), which began trading in its new merged form on the Singapore Exchange on November 3.
This amalgamation is an advancement of a long-standing trend: Reits coming together to gain scale, attract institutional investment in liquidity, lower their cost of funds and get bigger. It is a trend that has been playing out for years and brings heft and relevance to an otherwise troubled equity exchange that has been painfully short of new fuel.
The other is the proposed merger of ESR-Reit and Sabana-Reit, a deal that is kicking and screaming its way towards the finish line as minority unitholders cry foul about valuation.
It has been played out in the press thanks to the involvement of two activist fund managers in a scenario most unusual for Singapore’s deliberately confrontation-averse capital markets.