BT Mark to Market: From public to private - Reit delistings in Singapore
In the latest episode of the investment podcast Mark to Market from The Business Times, host Ben Paul muses on this question.
Delisting a new trend?
Companies like Paragon Reit and Frasers Hospitality Trust (FHT) have announced plans to delist, sparking conversations about the future of the Reit market. Paul breaks down the various factors influencing these decisions, from macroeconomic trends to structural challenges within the real estate sector.
He explains that higher interest rates, increased debt costs, and the strong Singapore dollar are contributing to these Reits' struggles to maintain their value and cash distributions. For investors, understanding these dynamics is crucial.
Why are Reits popular
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Reits have delivered consistent cash distributions and the tangible nature of their investments, such as shopping malls and hotels have been at the core of their enduring popularity to investors.
However as the episode reveals, the need for significant property reinvestment and asset enhancement initiatives (AEIs) often goes overlooked. Paragon Reit's plan for a major AEI at Paragon on Orchard Road, for example, underscores the hidden challenges in maintaining and increasing property value in a competitive market.
Underwhelming historical performance
Paul covers historical performance data, showing that hospitality trusts have struggled, with average returns significantly underperforming compared to other sectors. This context is vital for investors when considering the long-term health and viability of their holdings in Reits. Another compelling reason to tune into this episode is Paul's analysis of the potential future of the Singapore Reit market.
He wonders whether the trend of delisting will continue or if we'll see a resurgence of new, more resilient Reits entering the market.
Compensation and the minority investor
This episode dives into the delicate balance between the interests of Reit managers and the minority investors. Paul questions whether the compensation for minority investors in delisting scenarios is fair, citing past instances and current market conditions. This analysis would be helpful to investors faced with the question of accepting an offer or holding out for potentially better deals.
Listen now for Ben Paul's expertise and the detailed examination of various Reits' performance, strategic decisions, and market trends to help you navigate this complex investment landscape.
Mark to Market is a podcast of BT Correspondents. Look out for the next episode featuring wealth editor, Genevieve Cua. And if you have any thoughts or questions, feel free to reach out to us at btpodcasts@sph.com.sg.
Written and hosted by: Ben Paul (benpaul@sph.com.sg)
Edited by: Howie Lim & Claressa Monteiro
Produced by: Ben Paul, Howie Lim & Chai Pei Chieh
A podcast by BT Podcasts, The Business Times, SPH Media
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Do note: This podcast is meant to provide general information only. SPH Media accepts no liability for loss arising from any reliance on the podcast or use of third party's products and services. Please consult professional advisors for independent advice.
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