Singapore’s REIT goes regional

Deals are criticized all throughout the world for their price and reasoning, however, this is less usual in consensus-driven Singapore. Nonetheless, the $7 billion merger of two real estate investment trusts managed by Mapletree Investments, which is held by the city-sovereign state’s investment fund, has angered local investors and activists.

In theory, larger trusts have cheaper funding costs, and diversification mitigates the impact of downturns. Investors, on the other hand, are losing choice as restless managers extend their reach and prominence.

On Dec. 31, the first entity, Mapletree Commercial Trust (MACT.SI), offered Mapletree North Asia Commercial Trust (MAPE.SI) shareholders the option of cash and shares or all-scrip valued S$1.1949 – exactly the same as the net asset value per share. Activist firm Quarz Capital claims the deal undervalues MNACT, whose stock has dropped 4%.

The benefits of MCT have been questioned by a local investor group. MCT is owned by Mapletree Investments, which owns 34% of MCT and 38% of MNACT. A Singapore-focused fund would effectively become a regional operator with exposure to China, Korea, Japan, and Hong Kong as a result of the purchase.