Gordon Tang Sweetens Buyout Bid for Suntec REIT After Investors Shun “Unattractive” Offer

After a bid described by analysts as “unattractive” garnered less than a quarter of a percent acceptance, mysterious mainland investors Gordon and Celine Tang are raising their offer to buy out Singapore-listed Suntec REIT.

The Tangs, through their investment vehicle Aelios, are now willing to pay S$1.19 ($0.87) in exchange for each Suntec REIT unit which they do not yet control, according to announcement by the manager of the SGX-listed trust, sweetening their original bid of S$1.16 from one month ago by 2.6 percent. With the Tangs’ initial offer last month having gained acceptance from owners of just 0.24 percent of the total units issued, the couple have also moved the closing date of the offer from January 20 to February 5.

Since launching the buyout attempt, the Tang-led investor group has acquired another 0.71 percent of Suntec REIT’s units through open market purchases, bringing their control of the commercial trust to 33.32 percent as of 8 January. 50 percent acceptance is required for a buyout offer to succeed, leaving the group needing an additional 16.68 percent of the trust’s total units to complete the buyout.

The sweetened offer still faces steep odds, however, with analysts describing it as “deeply undervaluing” the long-term prospects of the REIT. “We continue to recommend investors reject Aelios’ revised cash offer of S$1.19 per unit for Suntec REIT as we believe it does not reflect the REIT’s intrinsic value,” Morningstar Equity analyst Xavier Lee said.

Not Sweet Enough

The Tang’s enhanced offer did little to change analysts’ perspective on the buyout attempt, after advisors had urged Suntec REIT unitholders to reject the Tangs’ original December bid on the basis that it fell significantly short of both the trust’s net asset value and brokerages’ target prices for the trust’s equity.

RHB analyst Vijay Natarajan said the updated offer still represents a 43 percent discount to the company’s net asset value (NAV) of S$2.07 per unit as of the third quarter of last year. He pointed out that the independent financial adviser (IFA) has deemed the offer ‘not fair and not reasonable,’ citing its calculated fair value range of S$2.07 to S$2.23 per unit. Natarajan added that asset values are “nearing bottom” and are expecting a slight increase over the next two years as interest rates decline.

RHB maintains a S$1.35 target price and a buy rating for Suntec REIT. Morningstar puts Suntec REIT’s fair value estimate at S$1.38 per unit.

“Given that the REIT’s unit price has rallied above S$1.19 at the open, we think that investors can get more value by selling in the open market as opposed to taking up this offer,” Morningstar said.

Management Potential

In early December 2024, the Tang-led investor group triggered the mandatory conditional offer in December 2024 when they increased their total holdings in Suntec REIT, to 31.45 percent, surpassing the regulatory threshold of 30 percent for a mandatory cash offer.

Analysts believe the Tangs do not intend to privatize the REIT with this offer, but the potential next steps for the investment group remain unclear. Suntec REIT owns a S$12.2 billion portfolio, managing 5.7 million square feet (529,547 square meters) of office, retail, and convention space across Singapore, Australia, and the UK, including the Suntec City mall and majority holdings in the office and convention centre elements of the Suntec City complex.

“We believe potential next steps by offeror [Aelios] could be the acquisition of the REIT manager from ESR considering a similar purchase earlier for Acrophyte Hospitality Trust or potential internalization to extract value,” RHB said.

Last year a Tang-owned vehicle became sponsor of ARA US Hospitality REIT and acquired the managers of the SGX-listed trust from ESR Group, before renaming it as Acrophyte Hospitality Trust. With ESR also controlling the manager of Suntec REIT, this latest offer appears to mirror that hospitality trust buyout and follows a string of earlier privatisations of SGX-listed property entities by the Tang family.

The family has already privatised Singapore developers SingHaiyi and Chip Eng Seng in 2023 and took over the then ARA US Hospitality Trust in July last year.

The source of the capital managed by the Tang family remains unclear, although published accounts suggest Gordon and Celine have extensive dealings with the family of former Thai prime minister Thaksin Shinawatra.