REIT ASIAPAC
COVER STORY
PAG -SPRING TAKEOVER
BATTLE BRINGS REIT
SHAREHOLDER ACTIVISM
TO NEW HEIGHTS
Cover Story
On 26 September 2018, alternative
investment management firm PAG launched
a takeover to acquire all the units it doesn’t
already own of Hong Kong-listed Spring REIT.
PAG’s final offer was HK$5.30 for each unit
of Spring REIT, a 76.7% premium to Spring
REIT’s 24 September 2018 closing price.
REIT AsiaPac spoke to Broderick Storie, PAG Real
Estate Partner, and Kevin Leung, Spring REIT
Managing Director, to bring unique insights into this
milestone in shareholder activism in Asia Pacific.
In its presentation to Spring REIT’s unitholders in August
2017, prior to the offer, PAG outlined four main issues:
1. Underperformance (relative to the IPO price
and the performance of other REITs),
2. Stranded value with Spring REIT trading at a
substantial discount to NAV,
3. Missed opportunities (in implementing
strategic reviews), and
4. Poor decision making, conflicts of interest
and failures of corporate governance on the
part of Spring REIT’s management team.
Spring REIT, whose sponsor or major shareholder is Japan-
based Mercuria Investments Co. Ltd.) argued against the bid,
citing the HK$5.30 offer being below NAV (Net Asset Value)
which exceeds $6 a share.
PAG’s bid fell through in November 2018 after receiving
unitholder acceptances that would have allowed PAG to hold
41.5% of the units, but the acceptances were short of the
50% level required for the offer to become unconditional.
Editor’s Note: A part of the discussion relates to a Spring
REIT’s intention to acquire a shopping mall in Huizhou,
Guangdong for RMB 1.65 billion ($243 million) from an
affiliate of mainland commercial property developer Beijing
Huamao Property. Since the interview, the transaction has
been cancelled.
Spring REIT property, China Central Place in Beijing. (Photo: Spring REIT)
4
5