ESR-REIT and Sabana REIT propose merger

Sponsor ESR is expected to hold about 12.2% of the units in the enlarged REIT.

ESR-REIT and Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) are proposing for a merger by way of a trust scheme of arrangement, the companies announced in a press release.

In this scheme, ESR-REIT will be acquiring all units of Sabana REIT in exchange for new units in ESR-REIT. To illustrate, if the scheme becomes effective, each Sabana unitholder will receive 94 consideration units for every 100 Sabana units held.

Based on the illustrative issue price of $0.4015 per consideration unit and the gross exchange ratio of 0.94x, the implied scheme consideration payable to Sabana unitholders is $0.377 per Sabana unit, and the implied aggregate scheme consideration would be around $396.9m.

Following the merger, the sponsor, ESR, is expected to hold around 12.2% of the total issued units in the enlarged 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,” ESR-REIT CEO and executive director Adrian Chui said.

Citigroup Global Markets Singapore, Maybank Kim Eng Securities, RHB Securities Singapore and UOB are the financial advisers to the ESR-REIT manager, whilst Credit Suisse (Singapore) and HSBC Singapore Branch are the financial advisers to the Sabana REIT manager.