Paragon REIT's proposed privatization offer by sponsor Cuscaden Peak seems in line with past Singapore REIT buyouts and M&A multiples, DBS Group Research analysts Geraldine Wong and Derek Tan say in a note.
They note the offer's consideration is at 1.07X price/net asset value, and the premium looks justified given the REIT's premium portfolio, anchored by Paragon Mall.
DBS thinks "low analyst coverage and low liquidity motivated the sponsor's offer to minority unitholders." The offer "may appeal to unitholders that are looking for a quick way to cash out of a stock that has been suffering from low liquidity," the bank says.
DBS has a S$1.05 target and a buy rating on the trust. Units are last at S$0.99.
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