RHB says Suntec Reit unitholders should reject S$1.16 offer, sees positives for the Reit

RHB has recommended unitholders of Suntec Real Estate Investment Trust (Reit) to reject the mandatory conditional cash offer for its units.

Property tycoon Gordon Tang and his wife Celine on Thursday (Dec 5) launched an offer to acquire all the units of Suntec Reit at S$1.16 per unit in cash.

RHB believes the offer price “severely undervalues the Reit, as it reflects a 44 per cent discount to its net asset value of S$2.07”. It is also below the research house’s target price of S$1.35 on the counter.

But RHB said in a note on Friday that the offer price will set a share price floor at current levels. It is also optimistic that the Reit will benefit from further rate cuts in 2025 due to its “high gearing and low fixed hedge position”.

The research house maintained its “buy” call and its target price on the counter.

As at Sep 30, Suntec Reit has an aggregate leverage ratio of 42.3 per cent. Its weighted average debt to maturity was 3.07 years and total fixed interest rate borrowings stood at about 61 per cent as at end-September.

Tang and his wife made the offer through their investment holding company Aelios. The offer was triggered after Aelios on Thursday acquired 62.5 million units, representing about 2.1 per cent of the Reit’s total units.

This brought its total deemed interest in the trust to 31.5 per cent, amounting to 918.7 million units. Aelios was previously deemed to have a 29.3 per cent stake in Suntec Reit.

Aelios said the offer was made solely to comply with the takeover code, and it intends to maintain the listing status of the Reit on the Singapore Exchange.

The offer will turn unconditional once Aelios receives 50 per cent or more of Suntec Reit’s total units.

Units of Suntec Reit were trading 2.6 per cent or S$0.03 higher at S$1.20 as at 10.26 am on Friday.