Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Activist shareholder Quarz objects to terms of $3 billion Singapore REIT merger

Stock Markets Feb 10, 2022 10:55PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Mapletree logo is pictured in its office in Singapore March 4, 2013. REUTERS/Edgar Su

By Anshuman Daga

SINGAPORE (Reuters) -Activist investor Quarz Capital Management said it is opposed to the terms of a proposed S$4.2 billion ($3.1 billion) merger of two Temasek-linked Singapore real estate investment trusts, saying the target firm was significantly undervalued.

It is urging Mapletree North Asia Commercial Trust (MNACT) to negotiate an improved offer from Mapletree Commercial Trust (MCT), according to a Feb. 9 open letter reviewed by Reuters.

Quarz, which has previously been successful in blocking a Singapore REIT deal, says it and its affiliates hold stakes that rank them among the top 10 unitholders of MNACT (SI:MAPE).

In a report published on research platform Smartkarma on Friday, analyst Travis Lundy said Quarz had provided many statements in its letter about how things would change on the MNACT side once the COVID-19 pandemic ended but had not addressed the impact on MCT .

MNACT's main portfolio includes one commercial property in Hong Kong and two in China, while MCT is a Singapore-focused REIT.

On Thursday, MNACT's units were down 1.8% before the Reuters story and ended up 0.9% on the day at S$1.12. On Friday, MNACT's units traded 1.8% lower.

"We note that Quarz acknowledges the deal rationale...and sees value in MNACT," MCT's manager said in a response to Reuters, but did not elaborate.

MNACT's manager said it continued to believe that the rationale and terms of the proposed merger were beneficial to unitholders from a strategic and financial perspective.

Singapore state investor Temasek declined comment. Its Mapletree Investments Pte Ltd, a global real estate conglomerate, is the single largest unitholder in both real estate investment trusts (REITs), owning 32.6% of MCT and 38.1% of MNACT as of Dec. 29.

On Dec. 31, MCT had announced plans to buy MNACT, seeking to create the seventh-largest REIT in Asia with an expected market valuation of about S$10.5 billion.

"We have received a substantial number of positive responses from MNACT unitholders who are institutional investors, family offices and retail investors since the open letter," Jan Moermann, chief investment officer at Quarz, said in a response to Reuters.

Quarz said in the letter that it supports the deal rationale but objects to the merger ratio and price.

"We agree that the offer is value destructive to unitholders and significantly undervalues MNACT," Moermann and Havard Chi, Quarz's Singapore-based research head, said in the letter.

MCT offered to acquire all units of MNACT in exchange for MCT units, or a combination of both cash and MCT units that gave the target's unitholders S$1.1949 per unit.

This represented a 7.6% premium to MNACT's Dec. 27 closing price of S$1.11 and was based on MCT's unitprice of S$2. The companies said the offer was in line with MNACT's net asset value (NAV) per unit.

Since then, MCT's units have fallen 9% to trade at S$1.82 on Friday.

"It appears that many Singaporean holders of MCT are thinking that a merger with MNACT would be a quality downgrade," said Lundy.

Quarz said "MNACT's board and management should initiate a transparent and robust process to sell the assets above NAV of S$1.23 instead of recommending the suboptimal offer of S$1.08-S$1.10 from MCT."

It added it was confident MNACT would stage a strong recovery from the second half of 2022, citing rising global COVID-19 vaccination rates.

Singapore's REIT market is dominated by retail investors who are attracted to the high dividends paid by trusts as the firms are mandated to pay out 90% of their rental income. Quarz mustered support to block a merger in 2020 between two Singapore REITs, whose managers are owned by a unit of Asian logistics giant ESR Cayman Ltd.

($1 = 1.3425 Singapore dollars)

Activist shareholder Quarz objects to terms of $3 billion Singapore REIT merger
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email