SimeDarbySaizenRTO

Whoops, it’s been more than two months since I’ve last blogged! I’ve been really busy at work, and July seems to be quite a relatively boring month for the market (relatively speaking), and hence there wasn’t anything that piqued my interest to comment about. However, today’s news on Saizen REIT was a shocker!

Now, for those who aren’t aware, Saizen REIT was one of my picks in early 2015, and somehow I “got lucky” and had my capital returned in about one year. After lingering on the SGX mainboard for about 3 months after the capital distribution, there was a decision made by the management that, if they did not receive any credible and reasonable offer by the end of June, the cash trust will begin it’s delisting process. However, they subsequently announced that there was an offer to takeover the trust, and more time was needed to study the offer. The results of the offer was made known earlier today, and the purchaser has been revealed to be Sime Darby!

Management seems to have the classic Japanese style of management, where things are disclosed quickly, although discretion seems to be ranked higher, as experienced when I attended their EGM late last year. They also seem quite “on the ball”, as they pushed for an earlier release of funds to unitholders from the divestment of their properties, and their quick decision on delisting, rather than burning cash while still listed with no business.

Regarding the purchaser, I was expecting a B-grade REIT to list, like AsiaMalls, or the rumoured solar energy REIT, but hey, it’s “freehold” already to me, so I’m not complaining. Furthermore, there will be a final cash payout of 9.87 cents per unit before Sim Darby takes over, so it’s another round of passive income, although technically it’s a return of capital.

So what will happen to the units? Well, my guess is that there MAY be a rights issue to “pay” for the Australian industrial properties, and after that, a share consolidation MAY take place to bring up the NAV of the trust to a “decent” level of between $0.80 to $1, as seen in Fraser’s takeover of Allco REIT during the 2008/2009 financial crisis.

The only bad thing I can say is, the location of the properties in Australia is unknown, so I guess I would have to wait for the subsequent announcements from the company for a clue on where the properties are. For the time being, I’m preparing my warchest, just in case…