Saizen REIT's former property, Clair Court, when it was still a residential REIT. (Photo: Saizen REIT)

Singapore-listed residential REIT, Saizen REIT (SGX:T8JU), has obtained majority approval from its unitholders to dispose the REIT’s entire portfolio of real estate assets in Japan to Triangle TMK.

The approval was obtained in an extraordinary general meeting (EGM) held on 1 March. Triangle TMK is a Japanese affiliate of Lone Star Funds. Also obtained at the EGM was the approval to issue a special distribution of SGD1.056 per unit once the disposal is complete.

Saizen REIT first received an offer from Triangle TMK to acquire Saizen REIT’s entire portfolio of real estate assets in Japan for JPY44.66 billion (SGD514.1 million) in October 2015. .

“Over the last five years, the unit price of Saizen REIT has traded at an average discount of 33.2%, to the NAV per unit”, according to the REIT’s presentation at the EGM.

“Saizen REIT is affected by the dynamics of the REIT market in Singapore, where DPU yield is a key pricing consideration, and this may not be reflective of the book value or stability of income”, it said.

The REIT also added that regulatory limits on leverage make it difficult to grow Saizen REIT with yield-accretive acquisitions via equity issuance or debt financing, “Saizen REIT may remain as one of the smallest REITs in Singapore”, said the REIT.

The manager of Saizen REIT has said that it is now considering various options during the liability claim period of up to four months upon completion of the disposal. This may include varying the type and geographical location of properties that it may invest in.

However the manager has also indicated that it intends to commence “termination and dissolution of Saizen REIT following the expiry of the liability claim period if there are no suitable options available”.

Units of Saizen REIT finished the trading day 1.38% higher on the Singapore Exchange upon the lifting of a trading halt, to end at SGD1.11.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.