Suntec REIT: Investors Should Not Accept Unattractive Cash Offer of SGD 1.16 per Unit

We recommend investors reject Aelios’ cash offer of SGD 1.16 per unit for Suntec REIT as we believe it does not reflect the REIT’s intrinsic value. This offer was triggered after Aelios, an investment holding vehicle of Gordon Tang and his wife, crossed the 30% ownership threshold for making a mandatory general offer on Dec. 5 when it bought 2.1% of the REIT’s units in the market at SGD 1.16 each. We believe that Aelios has no plans to take the REIT private, given its intention to maintain the listing status of Suntec REIT after the completion of the offer. To entice unitholder acceptance, we think the offer price should be at or above our fair value estimate of SGD 1.38 per unit. In any case, Suntec’s unit price has rallied above SGD 1.16 after this announcement and investors can get more value selling in the open market as opposed to taking up this offer.