FCOT should wait until DPU reflects AEI benefits before merging with FLT

THE article "Reit mergers: Is NAV a useful guidepost of value?" by Ben Paul (BT, March 2) raises points that are thought-provoking but ultimately moot.

The only practical way to value a Reit in a merger deal is to consider the market price of its units. But that does not mean that any transaction is fair simply because it was done at prevailing market prices. As a unitholder of Frasers Commercial Trust (FCOT), I have been protesting against its proposed merger with Frasers Logistics & Industrial Trust (FLT) because the market price of FCOT's units does not fully reflect the underlying value and cash generating potential of its assets.

Reits trade in the market on the basis of their distribution per unit (DPU), not their net asset value (NAV). Over the last couple of years, FCOT was pursuing asset enhancement initiatives (AEIs) at its two key properties - Alexandra Technopark and China Square Central - but the impact of these efforts are yet to be fully reflected in FCOT's DPU and the market price of its units.