SINGAPORE: Singapore's ESR-REIT has agreed to buy Sabana Shari’ah Compliant Industrial REIT in a deal that will create the country's fifth-largest industrial real estate investment trust by assets, adding to a wave of consolidation in the sector.
Each Sabana unitholder will receive 94 new ESR-REIT units for every 100 Sabana Units held, the companies said in a joint statement on Thursday (Jul 16). The merged entity will have total assets worth about S$4.1 billion, they said.
The two firms had tried to merge in 2017, but talks were called off.
ESR-REIT is backed by Asian logistics developer e-Shang Redwood (ESR) - a venture of private equity firm Warburg Pincus and global investors. e-Shang Redwood also owns shares in Sabana.
"The greater scale of the enlarged REIT diversifies our portfolio, reduces risks and enhances our resilience, especially in view of the COVID-19 pandemic," said Mr Adrian Chui, CEO and executive director of the ESR-REIT manager.
"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," added Mr Donald Han, CEO of the Sabana REIT manager.
Other recent REIT mergers in Singapore include OUE Commercial REIT buying OUE Hospitality Trust.
In 2018, ESR-REIT merged with Viva Industrial Trust. In early 2019, CapitaLand agreed to pay S$6 billion to buy logistics and industrial assets from state investor Temasek.
Trading in units of ESR and Sabana were halted on Thursday morning.
Citigroup Global Markets Singapore, Maybank Kim Eng Securities, RHB Securities Singapore, and United Overseas Bank Ltd are the financial advisers to ESR on the deal. Credit Suisse (Singapore) Ltd and The Hongkong and Shanghai Banking Corp Ltd, Singapore, are advising Sabana.