Singapore Reits need more support in wake of Paragon Reit’s proposed privatisation

IF INTEREST rates do not fall much further, equity fund-raising in the Singapore-listed real estate investment trusts (Reit) space could be muted.

Reits are sensitive to interest rates as higher borrowing costs affect distributions by Reits, and yield-driven investors flock to Reits when interest rates are low.

Also, investors today may be highly selective in supporting Reit equity fund-raising and prefer trusts to finance new acquisitions by selling existing assets. 

Ominously, Singapore’s once high-flying Reit sector, which turns 23 later this year, risks shrinking if more listed property-related trusts get privatised and delisted.

Recently, Times Properties, a wholly owned subsidiary of Cuscaden Peak Investments, proposed privatising Paragon Reit via a scheme of arrangement at S$0.98 per unit.