S-Reit mergers have mostly been value destructive

Unusual circumstances may be partly to blame, but purported benefits of revenue enhancement and DPU boosts have also not materialised

Published Thu, Apr 15, 2021 · 05:50 AM

S-Reits

ONE plus one has been less than two for most Singapore real estate investment trust (S-Reit) mergers, despite the promises of synergistic benefits and cost savings managers have dangled before unitholders when rallying them to vote for such deals.

This debunks the "bigger is better" adage that investors have been led to believe since the first Reit merger - between ESR-Reit and Viva Industrial Trust - was completed in October 2018.

Data compiled by The Business Times shows the acquirer's (or combined entity's) share price and total returns for most of the five successful Reit mergers disappointing over time.

In terms of share price performance alone, four of them - CapitaLand Integrated Commercial Trust (CICT), Ascott Residence Trust (ART), OUE Commercial Reit (OUECT) and ESR-Reit - have returned bet…