Singapore Real-Estate M&A Activity Set to Heat Up

Deal activity among publicly listed real-estate firms in Singapore looks set to accelerate as attractive valuations and expectations for a recovery in the property market drive investor interest.

Property firms and real-estate investment trusts have completed deals worth more than US$1 billion so far in 2017, and there are more in the offing.

"Current market sentiment seems positive for M&A/privatization, especially for companies which are trading below net asset value," said Ian Loh, investment chief at real-estate consultancy Knight Frank LLP.

One of the biggest prizes on the market is Global Logistics Properties Ltd. (MC0.SG), which has a market value of nearly 14 billion Singapore dollars ($10 billion). The warehouse operator is currently in talks with several interested parties who are conducting due diligence. Despite the stock surging about 65% over the past eight months, it's still only at levels last seen in September 2014.

A deal for GLP would dwarf other acquisitions in the sector so far this year.

Earlier this month, a consortium including U.S. private-equity firm Warburg Pincus LLC bought ARA Asset Management Ltd. for S$1.78 billion.

On Wednesday, Croesus Retail Trust (S6NU.SG), which has a market cap of S$770 million, said it had been approached regarding a potential transaction. Just days earlier, Sabana REIT (M1GU.SG), valued at nearly S$500 million, said it had received proposals for a potential deal from several parties. Meanwhile, United Engineers Ltd. (U04.SG) has said its controlling shareholders are in talks to sell their stakes in the company, which has a S$1.8 billion market cap.

Helping the real-estate market has been Singapore's decision last month to ease some of the property-cooling measures of the past several years. The relaxed rules also come as residential rents stabilize and office rents pick up. First-quarter transaction volume in the private home-sales market was the highest in two and a half years, real-estate services firm Jones Lang LaSalle said.

Jones Lang LaSalle "expects Singapore property-market fundamentals to continue to improve over the next few years and we see commercial assets as good investments," said Regina Lim, regional capital-markets research chief. "So long as the stock market remains undervalued, we expect more" deals.

Write to Saurabh Chaturvedi at

(END) Dow Jones Newswires

April 26, 2017 07:10 ET (11:10 GMT)