Posted on 22 Jan 2020
CapitaLand Mall Trust and CapitaLand Commercial Trust announced that they are going to merge. What are your thoughts on it? If you own the REIT, is it a good deal for you?
Hopefully, there is some synergy and cost may go down,e.g REITs manager fees, share's fee). Another benefit would be that they are able to go for bigger projects since they can have more debt. (REITs has a cap to their gearing ratio, so if there is a bigger base, there can be more debt).
I think these would be the main benefits.
Deal-wise, they seem to be paying fair value for it, rather than a premium. But hey, at least they are not undercutting it.
I think most assume its a good thing for shareholders of both side but it may not be as simple as that.
With the merger, the combined new company has to take on the debt and liabilites of both side. Of course it benefits from being able to utilise assets from both sides.
Another point is that 1 is a retail REIT and the other is a commercial REIT, it changes the fundamentals of the company should they merge.
Ultimately, study both companies and have a good understanding of both sectors instead of assuming they are the same because they are both REITs.
Hi, sorry I'm new to investing.
Back to this equation. If I bought [email protected] n mkt goes up to $2, is ...
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