$2.78b offer to take Paragon Reit private is fair and reasonable: Independent adviser

Independent directors urge unit holders to vote in favour of deal at EGM on April 22

- Kang Wan Chern

A $2.78 billion offer to privatize the real estate investment trust (Reit) that holds the Paragon mall in Orchard Road has been deemed "fair and reasonable" by an independent assessor.

The Reit's independent directors are thus recommending that unit holders vote in favour of the deal.

Documents lodged on the Singapore Exchange on March 27 revealed that PrimePartners, the independent financial adviser appointed by Paragon Reit, has concluded after considering the financial terms involved that the offer is fair and reasonable.

The offer to take Paragon Reit private by major shareholder Cuscaden Peak Investments comprises paying unit holders 98 cents per unit in cash. It was first announced on Feb 11.

PrimePartners noted in the documents that the offer price is fair and reasonable as it is higher than the Reit's value per share after excluding debt, potential fees and cash reserves.

The offer price also represents a premium over the last traded price before the offer was announced, and is higher than the level at which the Reit had been traded over the past two years.

It is also higher than the current market price of similar Singapore retail Reits, as well as the average target price analysts have ascribed to the stock.