The long-mooted merger between two Singapore industrial real estate investment trusts (REITs) – ESR-REIT and Sabana REIT – is about to go ahead in a deal valuing the Sabana REIT at S$396.9m (€250m).
Managers of the two REITs today jointly announced the proposed merger by way of a trust scheme which will create the fifth-largest industrial vehicle on the Singapore stock exchange, with combined asset under management of S$4.1bn.
Shareholders in Sabana, a shari’ah-compliant REIT, will receive 94 new ESR Singapore REIT shares in exchange for every 100 Sabana REIT shares.
Following the merger, the sponsor, ESR Cayman, is expected to hold about 12.2% of total issued units in the enlarged REIT. It will have a market capitalisation of about S$1.8bn.
ESR first attempted a merger with Sabana REIT in 2017, but the talks were called off after two months. ESR REIT, however, continued to acquire shares in the Sabana REIT over the past two years.
Adrian Chui, CEO and executive director of ESR-REIT’s manager, said the merger was in line with a strategy to establish ESR-REIT as a leading pan-Asian industrial vehicle.
He added: “The greater scale of the enlarged group diversifies our portfolio, reduces risks and enhances our resilience, especially in view of the COVID-19 pandemic.”
Donald Han, Sabana REIT’s CEO, said the merger would be “transformational” for Sabana REIT.
“This better positions us to capitalise on further expansion opportunities and to participate in continued growth of the industrial sector as the global economy emerges from the COVID-19 pandemic,” he said.
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