The managers of ESR-REIT and Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) jointly announced the
proposed merger of ESR-REIT and Sabana REIT.
According to a joint statement by companies, the proposed merger will be effected by way of a trust scheme of arrangement in compliance
with the Singapore Code on Take-overs and Mergers, with ESR-REIT acquiring all units of Sabana REIT in exchange for new units in ESR-REIT.
Each Sabana Unitholder will receive 94 new consideration units for every 100 Sabana Units held, said in a joint statement. ”The Merger will solidify the Enlarged REIT’s position amongst the top five developer-backed industrial S-REITs by asset size, with total assets increasing to approximately S$4.1 billion. The Enlarged REIT will also become the 4th largest industrial S-REIT by market share based on gross floor area (“GFA”).”
Following the Merger, the Sponsor, ESR, is expected to hold approximately 12.2% of the total issued units in the Enlarged REIT.
“The merger is in line with our strategy to establish ESR-REIT as one of the leading Pan-Asian industrial REITs. We believe the Merger will deepen our presence in Singapore and solidify the Enlarged REIT’s position as the 5th largest industrial REIT in the country by asset size and the 4th largest by market share,” said Adrian Chui, Chief Executive Officer and Executive Director of the ESR-REIT.
”The Enlarged REIT is expected to have a larger market capitalisation and free float, as well as higher trading liquidity. These will help to facilitate its potential inclusion in key indices which will provide the Enlarged REIT with access to a wider and more diversified investor base and increased analyst coverage. Moreover, the greater scale of the Enlarged REIT diversifies our portfolio, reduces risks and enhances our resilience, especially in view of the COVID-19 pandemic. It also provides us with the potential to reap significant operational synergies and realise upside through portfolio leaseup, AEI, and redevelopment opportunities, thereby enabling us to build long-term value for unitholders,” he added.
“The merger will be transformational for Sabana REIT, accelerating our growth and propelling us immediately to be amongst the largest industrial REITs in Singapore. The enhanced scale will raise our visibility and enable us to be more competitive within the industrial S-REIT space, while the larger asset and tenant base will put us in a stronger position to undertake initiatives to improve and rejuvenate the portfolio at lower costs with minimised execution risks. With ESR as a developer-sponsor, the Enlarged REIT will also have access to a pipeline of assets worth over US$22 billion in a market where quality logistics properties are increasingly scarce. This better positions us to capitalise on further expansion opportunities and participate in the continued growth of the industrial sector as the global economy
emerges from the COVID-19 pandemic,” said Donald Han, Chief Executive Officer of the Sabana REIT.