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ESR-REIT and Viva Industrial Trust are poised to make history by being the first Singapore-listed real estate investment trusts (REIT) to merge, according to separate SGX filings.
The move is expected to create Singapore’s fourth biggest REIT after their agreement to merge became binding on Monday (15 Oct).
Previously, their proposed amalgamation was approved by their unitholders during their respective meetings on 31 August, in addition to receiving the green light from the High Court and industrial landlord JTC.
The combined entity will have an overall property portfolio valued at around $3 billion as of 31 March, comprising 56 industrial properties collectively measuring 13.6 million sq ft.
“The strong voting support we have received from our unitholders validates our strategy that size does matter for REIT,” said Adrian Chui, CEO and executive director of ESR-REIT’s manager, ESR Funds Management (S) Ltd.
“We are now one step closer to completing the transformational transaction which will ultimately provide us with a more robust, competitive platform and strengthens our market position.”
There will be more leasing opportunities due to the enlarged trust’s greater variety of offered industrial properties across five sub-asset classes – business parks, high-specs industrial premises, logistics & warehouses, general industrial space and light industrial premises.
Moreover, the enlarged trust will benefit from economies of scale due to the bigger portfolio. For instance, it’s expected to have better access to capital and debt with lower cost.
The combined entity will also be well-supported by its developer-sponsor, ESR Cayman Limited and its subsidiaries, which collectively oversee 10 million sq m of gross floor area (GFA) worth US$13 billion as of 30 June.
As the agreement has become binding, payment for the scheme consideration will be made on Wednesday (17 Oct), and Viva’s stapled securities are expected to be delisted from SGX next Monday (22 Oct).
Meanwhile, ESR-REIT’s trustee RBC Investor Services Trust Singapore has inked a $700 million unsecured loan facility deal with several banks, including UOB, RHB Bank, HSBC and Maybank.
The debt’s proceeds will be used to refinance RBC’s existing loans, VIT’s existing debt and multicurrency medium term note programme, a portion of the cash consideration for the merger and other related costs.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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