Gordon Tang Buyout of Suntec REIT Looks Set to Fail as Deadline Extended Again

Suntec City (Image: Suntec City)

Mysterious mainland investors Gordon and Celine Tang may fall short in their fourth attempt to buy out a Singapore-listed property investor, with owners of Suntec REIT equity turning up their noses at what analysts describe as a low-ball privatisation offer.

Aelios, an investment vehicle controlled by the Chinese couple, announced on Monday that it would extend the deadline for acceptance of a share purchase offer by four days, a second extension after holders of just 1.39 percent of shares not already under its control had agreed to the offer.

With the buyout requiring 50 percent acceptance to succeed, and the Tang group controlling 35.64 percent of the trust’s equity as of 3 February, including the unitholder acceptances to date, analysts see little chance of the privatisation succeeding.

“It is unlikely for Aelios to succeed given the offer price lacks an attractive premium over the current trading price,” Xavier Lee, an equity analyst with Morningstar, told Mingtiandi.

Not Sweet Enough
On 8 January Aelios had boosted its offer for Suntec REIT units from S$1.16 ($0.86) to S$1.19, however, with the trust’s equity closing at S$1.17 on Tuesday, industry experts see the offer as uncompelling, particularly when compared to the underlying value of the portfolio assets.

Gordon Tang previously led buyouts of SingHaiyi, Chip Eng Seng and ARA Hospitality Trust

Vijay Natarajan, an analyst with RHB pointed out that the offer price represents a more than 40 percent discount to the REIT’s book value as of 31 December, with the bank recommending that its clients reject the offer.

With the 8 January enhanced offer having extended the deadline for acceptance from 20 January to Monday, investors now have until Friday to accept the deal, with Aelios saying it does not intend to further boost the offer price in the absence of a competing bid.

Aelios also noted in its Monday announcement that, should the buyout succeed, Suntec REIT’s fourth quarter distribution payment of 1.57 Singapore cents per unit announced last week would be deducted from its S$1.19 offer price, reducing Aelios’ final payout to S$1.17 per unit.

Analysts also highlighted that based on last week’s financial report, Suntec REIT’s portfolio in Singapore – its largest market by asset value – saw net property income from office assets increase by 0.9 percent in the second half of 2024, while income from retail assets rose 1.3 percent.

In addition to commercial properties in the UK and Australia, Suntec REIT owns the Suntec City mall and convention centre in Singapore, as well as office space in the complex and a one-third shareholding in the One Raffles Quay office tower.

Hot Streak Halted
RHB’s Natarajan told Mingtiandi that while a failure of the bid is unlikely to cause significant issues for the REIT, the focus will shift to Aelios’ next steps, especially as the Tang-led investor group holds a third of the trust’s equity.

Earlier, RHB had suggested that Aelios could follow a similar strategy to its acquisition of Acrophyte Hospitality Trust where it went on to purchase the REIT manager from ESR Group, which is also controlling the manager of Suntec REIT.

The Tangs’ Suntec frustration comes after the couple had privatised SGX-listed builder Chip Eng Seng in 2023. In 2021 the Tang’s had bought out mainboard-listed SingHaiYi.