The team of analysts at RHB Bank Singapore have kept their “buy” call and target price (TP) of $1.35 unchanged on Suntec REIT following a mandatory cash offer of $1.16 per unit put up for the REIT by investment holding company, Aelios.
On Dec 5, Aelios, which is equally held by Gordon Tang and spouse Celine Tang, purchased 62.5 million units equal to a 2.14% stake in the REIT via the open market. This resulted in the offeror concert party holding over 30% of total units, triggering a mandatory general offer for all the units.
The offer is conditional upon the REIT substantial unitholders receiving more than 50% of units and will be adjusted for any distributions paid out during the offer period.
Following this, the team at RHB notes that the offer price of $1.16 per unit “severely undervalues” Suntec REIT, reflecting a 44% discount to its net asset value of $2.07.
“It is also well below our TP, and unitholders should reject the offer. The offeror also has stated its intention to maintain the listing status of the REIT. The offer price will, however, set a share price floor at current levels and Suntec REIT will be a prime beneficiary of further rate cuts in 2025 due to its high gearing and low fixed hedge position,” they add.
As at 10.40 am, units in Suntec REIT are trading 2 cents higher or 1.71% up at $1.19.
