Paragon Reit to privatise with $0.98 cash offer per unit

Paragon Reit Management and Times Properties, a subsidiary of Cuscaden Peak Investments, have announced plans to privatise and delist Paragon Reit through a trust scheme of arrangement.

The scheme offers $0.9800 per unit in cash, a 7.1% premium to the adjusted net asset value, and premiums over the 1-month and 12-month volume-weighted average prices. Paragon Reit will also pay 2.33 Singapore cents per unit as cash distributions for the second half of FY2024, which will not affect the cash offer.

The offeror said Paragon Reit has struggled with low trading liquidity, limited analyst coverage, and difficulty raising capital.

Paragon, its main asset, is also facing increased competition from upgraded nearby malls and a slowdown in luxury spending.

The offeror plans a major asset enhancement initiative (AEI) for Paragon, which could cost between $300m and $600m and take 3 to 4 years to complete. Given the size of Paragon in the portfolio, the other assets in the REIT cannot offset these challenges.

The proposal requires approval from Unitholders and regulatory authorities. If successful, the privatisation will allow unitholders to cash out at an attractive price and reinvest elsewhere.