Cuscaden Peak to take Paragon REIT private

The group offered $0.98 in cash per unit.

Cuscaden Peak Pte. Ltd has made an offer to take Paragon REIT private for $0.98 in cash per unit, according to the REIT’s manager Paragon REIT Management Pte. Ltd.

According to the press release, the offer is 7.1% higher than the company’s estimated net asset value.

Paragon REIT will still payouts out its regular cash distribution of $2.33 per unit, and the buyout price will not be reduced by this amount.

The rationale for the privatisation is the low trading activity and limited investor interest in Paragon REIT, which have made it difficult to raise capital and expand its portfolio. Since its IPO in 2013, its total assets have grown much slower than its peers.

Additionally, the REIT relies heavily on Paragon Mall, which makes up 72% of its total value. However, Paragon is over 30 years old and faces increasing competition from nearby malls undergoing major upgrades, which could impact its premium positioning.

In addition to these competitive pressures, a persistent slowdown in luxury spending post-pandemic, with international luxury spending at 74%3 of its 2019 peak, has also weighed on Paragon’s performance.