Soilbuild Reit's independent adviser says S$0.55 per unit offer is 'fair and reasonable'

AS Soilbuild Business Space Reit's (Soilbuild Reit) appointed independent financial adviser, KPMG said the offer to take the Reit private at S$0.55 per unit is "fair and reasonable", and recommended the Reit's independent directors to advise unitholders to vote in favour of the scheme of arrangement.

Since the Reit declared a Q4 distribution of 1.194 Singapore cents per unit, the scheme consideration has been adjusted to 53.806 cents per unit.

The Reit manager said that the adjusted scheme consideration implied a price to net asset value (P/NAV) multiple of 0.96 to 0.99 times, which exceeds the historical pre-Covid-19 P/NAV trading multiples of the Reit's units.

Following the announcement made via a scheme document sent electronically on Wednesday, an extraordinary general meeting will be held virtually on March 11 at 2pm, while the scheme meeting will take place at 2.30pm on the same day.

If the transaction is approved by unitholders at the scheme meeting, it is expected to become effective by March 31.

To recap, Soilbuild Group Holdings' executive chairman Lim Chap Huat and Blackstone Real Estate made an offer to take the Reit private with a scheme consideration of S$0.55 per unit in December last year.

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At the time of the announcement, the offer represented a premium of about 34.5 per cent, 34.8 per cent, 53.2 per cent and 29.1 per cent over the volume-weighted average price per Soilbuild Reit unit respectively for the one-month, three-month, six-month and 12-month period up to and including Aug 31.

The offeror added that the scheme consideration would be reduced by any amount of distribution declared, made or paid by the manager in respect of the period from Oct 1, 2020 to March 31, 2021. (see amendment note)

In conjunction with the trust scheme, Soilbuild Reit has also entered into an agreement with related entities of Blackstone to dispose of its Australian assets.

The disposal is however pending approval from unitholders. 

Analysts were largely positive on the offer shortly after it was announced, with Jefferies analyst Krishna Guha calling the offer price "fair" compared to the Reit's book value.

Units of Soilbuild Reit closed at S$0.535 on Wednesday, up 0.94 per cent.

Amendment note: An earlier version of this article stated that the scheme consideration would be reduced by any amount of distribution paid by the manager for the period between Dec 14, 2020 and March 31, 2021. The correct period should be from Oct 1, 2020 to March 31, 2021.