ESR REIT ups offer for ALOG merger to $0.97 per unit

The revised offer will increase ALOG’s DPU accreditation to 12.8%.

ESR REIT (EREIT) has revised up its proposed scheme consideration for ARA LOGOS Logistics Trust (ALOG) to $0.97 per unit from $0.95 per unit, increasing the gross exchange ratio from 1.863x to 1.97x.

The ERIET took into consideration the following for its revised scheme:

1. Recommendations from the proxy advisers, Institutional Shareholder Services and Glass, Lewis & Co;
2. Issues of overlapping mandates concerning asset pipeline, tenant, operational network and financial resources from the sponsor, following the completion of the acquisition of ARA Asset Management by ESR Group, and;
3. ALOG’s quality logistics asset portfolio, with 45% located in Australia, which has seen increasing demand for logistics assets and cap rate compression.

CGS CIMB said the revised offer will increase distribution per unit accretion for ALOG from 8.2% to 12.8%, “assuming cash reinvested at EREIT’s 1-month VWAP of S$0.4716,” and its pro forma net asset value accretion from 2.2% to 5.3%.

The analysis said the new consideration is a “more attractive and fairer offer.”

“[We] see income stability and inorganic growth potential for the merged entity over the long term,” CGS CIMB said.

Given the new offer, the extraordinary general meeting between EREIT and ALOG scheduled for 27 January will be postponed.

The merger will immediately increase the combined AUM size to S$5.4bn and position the REIT as the 13th largest SREIT by AUM.