Cuscaden Peak likely ‘happy’ with SPH REIT listing: Daiwa

The Paragon Mall at Singapore's Orchard Road shopping belt, shown with Longchamp and Gucci signage, is part of SPH REIT's portfolio. Photo taken in January 2022The Paragon Mall at Singapore's Orchard Road shopping belt, shown with Longchamp and Gucci signage, is part of SPH REIT's portfolio. Photo taken in January 2022

Cuscaden Peak is likely “happy” to keep SPH REIT as a listed entity while collecting REIT-management fees, Daiwa said in a note Thursday.

The Cuscaden Peak consortium was required to make an offer for all SPH REIT’s units after the results of shareholders’ choice of consideration for their SPH shares left Cuscaden Peak holding around 47.2 percent of SPH REIT. As of Tuesday, Cuscaden Peak owned, controlled or agreed to acquire around 52 percent of SPH REIT’s units, turning its offer unconditional.

As of Tuesday, Cuscaden Peak owned, controlled or agreed to acquire around 52 percent of SPH REIT’s units, the filing said.

But Daiwa indicated the bid may not be in earnest.

“We believe the Cuscaden Peak chain-offer price of S$0.9372/unit (after adjusting for recent SPH REIT distributions) was not aggressive in view of the rapid reopening of the retail sector over the past few weeks, and represented the bare-minimum required under the takeover code,” Daiwa said. Units of SPH REIT were at S$0.945 at 2:20 p.m. SGT Friday.

“We suspect that Cuscaden Peak probably has more ambitious plans on where it wants to position SPH REIT, and with SPH successfully privatised and a majority ownership in SPH REIT, we believe the onus is clearly on Cuscaden Peak to articulate its plans to the market,” the Japanese investment bank said.

Daiwa rates SPH REIT at Hold, with a target price of S$0.95, but pointed to upside risks from reopening as Covid-related restrictions are rolled back, which could spur sharp recovery in retail properties, including the potential for positive rental reversions.

SPH REIT has a portfolio of five assets across Singapore and Australia. In Singapore, the REIT owns the Paragon mall, The Clementi Mall and The Rail Mall. In Australia, the REIT owns a 50 percent interest in Westfield Marion Shopping Centre in Adelaide, South Australia, and an 85 percent stake in Figtree Grove Shopping Centre in Wollongong, New South Wales.

Who is Cuscaden Peak?

The consortium Cuscaden Peak includes Tiga Stars, a wholly owned subsidiary of tycoon Ong Beng Seng’s Hotel Properties, and Adenium, which is a wholly owned subsidiary of Temasek portfolio company CLA Real Estate Holdings, as well as Mapletree Investments‘ indirect wholly owned subsidiary Mapletree Fortress. Mapletree Investments is wholly owned by Singapore state-owned investment company Temasek.

Cuscaden Peak is 40 percent owned by Tiga Stars, 30 percent by Adenium and 30 percent by Mapletree Fortress. Tiga Stars is 70 percent owned by Hotel Properties, with the remainder held by Como Holdings, which is ultimately owned by Ong Beng Seng, who is the controlling shareholder of Singapore-listed Hotel Properties. Adenium is wholly owned by CLA Real Estate Holdings, which is an independently managed portfolio company of Temasek.