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The news is out.
Purchaser is Triangle TMK which is a Japanese affiliate of Lone Star Real Estate Fund IV and Lone Star Funds. The Purchase Consideration is at a 3.4% premium to the appraised value of the Properties.
The Purchase Consideration is estimated to translate into an implied net offer price of S$1.172 per unit of Saizen REIT (“Unit”), or a slight premium to Saizen REIT’s adjusted net asset value (“NAV”) per Unit.
The Proposed Transaction is conditional upon, among others, approval from Unitholders at an extraordinary general meeting of Saizen REIT to be convened and is expected to be completed in the first quarter of 2016 and no later than 31 March 2016 or such other date as the parties may agree in writing.
See press release: here.
So, new shareholders who bought into Saizen REIT even at 92c or 93c a unit in the days before the trading halt yesterday would be in for a nice windfall too.
To be quite honest, I am pleasantly surprised because I was expecting an offer that is, perhaps, at a 5% or even 10% discount to NAV which means a price of $1.03 to $1.08 per unit.
I was being realistic because it is much more difficult to find a buyer who is able to buy the entire portfolio of more than 130 buildings at one go compared to selling one building at a time.
$1.17 a unit exceeds my expectation and I am in favour of the sale although I will miss having Saizen REIT in my portfolio. I have had it for so long and it has been good to me as a stable and meaningful income generator in the last few years.
Now, I notice some who are saying that Saizen REIT provides a good lesson on investing in REITs and that if we buy a REIT at a big discount to NAV, we are safe. This is not 100% accurate and, in fact, it could be a dangerous belief.
I did not buy into Saizen REIT just because it was trading at a huge discount to NAV but because the NAV was also realistic. This was just one of the many considerations I had. There were also other reasons which made Saizen REIT a great investment to me.
Interested readers might want to read my past blog posts on Saizen REIT and why I was so convinced that Saizen REIT was a fantastic investment. (Use the "Search ASSI" feature at the top of my blog.)
Now, with Saizen REIT set to be delisted, I will see my cash position swell as it is one of my 3 largest investments in S-REITs and accounts for slightly more than 20% of my passive income from S-REITs.
For me, it will be like getting 17 income distributions all at once which is better than getting them over a period of 8.5 years, for sure.
A dollar today is better than a dollar sometime in the future.
This is a good outcome and I must not be sentimental.
Congratulations to all my fellow shareholders who got in at the right time and held on till today.
Huat ah!
(Read comment made on 2 Nov 15 at 6.09 pm below.)
Related posts:
1. Possible delisting of Saizen REIT.
2. Saizen REIT: Deeply undervalued.
3. Saizen REIT: Sell the entire portfolio?
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