SPH provided the circular today about its upcoming move to IPO their REIT. For me it is a good lesson of how well they executed this financial engineering.

Presentation slide can be viewed here.

Paragon spin-off as a 99 year leasehold

While Paragon is a free hold property, SPH have effectively did what Keppel Land did when they sold off Ocean Financial Centre as a 99 year lease hold.

SPH gets to hold on to that land while again the REIT investors may think they have the full worth of a lucrative free hold.

The latest valuation is at 2.6 billion. They spin it off at 2.5 billion. Winner.

Realized $900 million in value

Compared to book value of 2.1 billion, SPH will list the assets by selling it off at nearly 3 billion.

They will pay out $0.18 out of $0.558, letting them keep  ...