Singapore will extend its merger and acquisition rule to real estate investment trusts (Reits)

Singapore will extend its merger and acquisition rule to real estate investment trusts (Reits) to make the Republic’s regulations more in line with industry standards in the United Kingdom and Australia.

Parties intending to acquire 30 per cent or more of the total units of a Reit will be required to make a general offer for all outstanding units, the Securities Industry Council (SIC) said in a statement yesterday.

In addition, existing investors holding between 30 and 50 per cent of the units of a Reit who acquire more than 1 per cent of the Reit’s total units within a six-month period must make a general offer.

A proper framework, said SIC, that ensures the fair and equal treatment of all unitholders would enhance the reputation of the Reit market in Singapore and add to its growth.

Extending the takeover code to Reits would not only protect the interests of minority investors but also that of the incumbent controlling unitholders, it added.

“In the absence of a proper framework governing takeover and merger transactions of Reits, a party would be able to accumulate effective control of a Reit without incurring a general offer obligation,” said the SIC in its statement.

Under such circumstances, incumbent controlling unitholders might not be able to extract a control premium from such a party, it added.

SIC said the Monetary Authority of Singapore will amend the relevant securities laws to give effect to the new requirements.

Source: Weekend Today, 09 June 2007