The debate between DPU and NAV

THE Singapore real estate investment trust (Reit) regime started in 2002 when it saw the successful listing of its first Reit. Over the course of 18 years, the market segment has now grown to 43 Reits and property trusts totalling around S$100 billion in market capitalisation. Singapore now has the largest Reit market in Asia (ex-Japan) and continues to be on a growth trajectory to becoming a global Reit hub.

As a sign of the regime's ongoing maturing process, there have been more instances of consolidation among Reits in recent years, including those with differing asset classes. Such consolidations first happened in 2018, and the market has since seen the completion of three other mergers, with two other reported proposed mergers pending approvals.

In certain cases, how the Reits are to be valued in these transactions - whether to base it upon distribution per unit (DPU) or price to net asset value (NAV) - especially during a sale or M&A transaction, has drawn much interest from investors and analysts.