ESR-REIT and ARA Logos Logistics Trust are planning to merge in order to create a diversified portfolio of $1.4 billion, where ESR-Reit will acquire all of ARA Logos’ units in lieu of cash and new units, according to media reports.
As a result of the merger, the new unit will be named ESR-Logos Reit. The unitholders of ARA Logos will receive a scheme consideration of $0.95 per ARA Logos unit – comprising $0.095 in cash and 1.6765 new ESR-Reit units, that will be issued $0.51 apiece.
This means that an ARA Logos unitholder will receive $95 in cash and 1,676 units for every 1,000 ARA Logos units held by the books closure date.
ESR REIT chief executive Adrian Chui told the media, “The proposed merger will also deepen our presence in key Singapore industrial clusters and expand our foothold in new economic hubs in Australia.”
Currently, ESR owns 58 properties that include business parks, logistics and warehouses and a property value of $3.2 billion. ALOG has 29 logistics warehouses in Singapore and Australia valued at around S$1.8 billion.
If this merger is approved, ESR-Logos Reit will contain $5.4 billion in total assets in Singapore and Australia along with 41 properties owned via investment funds in Australia.
Benefits from this potential merger include increased exposure to new economy real estate, which is expected to account for 5.7 percent of ESR-Logos Reit’s total portfolio.