Hot stock: Soilbuild Reit rises 5.5% on buyout offer

UNITS of Soilbuild Business Space Reit advanced on Monday afternoon after its sponsor's chairman and Blackstone proposed to take the trust private at a premium.

The scheme consideration is 55 Singapore cents in cash per unit, although this will be reduced by the amount of any distribution declared by the real estate investment trust (Reit) for Q4 2020 and Q1 2021.

The counter rose as much as 5.5 per cent or 2.8 cents on the day to reach 53.8 cents at around 1.01pm, a minute after trading resumed. Its trading halt, called on Dec 9, was lifted after the midday break on Monday.

The Reit's units were trading at 53.5 cents as at 3.28pm, up 4.9 per cent or 2.5 cents from its last traded price of 51 cents on Dec 8. About 10.2 million units changed hands by then.

The offeror Clay Holdings III is indirectly owned by Soilbuild Group chairman Lim Chap Huat and Blackstone Real Estate.

Mr Lim and his three sons owned a combined 30.3 per cent stake in the Reit as at Dec 14.

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The proposed scheme consideration represents a premium of 34.5 per cent, 34.8 per cent, 53.2 per cent and 29.1 per cent over the volume-weighted average price for the one-month, three-month, six-month and 12-month period up to Aug 31, respectively.

On Monday morning, the offeror noted that the Reit's ability to undertake acquisitions accretive to distribution per unit (DPU) has been limited, partly due to its high DPU yield. That also hindered the Reit from bidding competitively for third-party assets.

Moreover, a delisting will allow the Reit manager to not be constrained by the 50 per cent leverage limit, and provide more flexible access to capital markets.