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In view of the proposed merger of Viva Industrial Trust (VIT) and ESR REIT, Merrill Lynch (Singapore) (MLS) announced that it has returned units previously borrowed from ESR REIT.
The move – which was made pursuant to Rule 12.1 of the Singapore Code on Take-overs and Mergers – comes as MLS is “an associate of VIT by virtue of it being the sole financial adviser to (i) Viva Industrial Trust Management in its capacity as the manager of Viva Industrial Real Estate Investment Trust, and (ii) Viva Asset Management in its capacity as the trustee-manager of Viva Industrial Business Trust”.
To be effected by way of a trust scheme arrangement, the proposed merger is expected to create the fourth largest industrial REIT in Singapore with combined assets of $3 billion.
The merger will see ESR-Reit acquiring all the stapled securities of VIT, and in return issue new ESR-Reit units to the stapled security holders – providing VIT with an implied equity value of around $936.7 million.
Based on the issue price of $0.54 per new ESR-REIT unit, VIT stapled security-holders can expect to receive $9.60 in cash, and 160 new ESR-Reit units for every 100 stapled securities held.
“Size does matter for REITs,” said Adrian Chui, CEO and executive director of the ESR-REIT Manager. “This merger will be a milestone transaction that will create a portfolio that is stronger, more resilient and better-diversified. Leveraging our respective capabilities in operational and capital management, we will be in a strong position to deliver value to unitholders.”
The enlarged trust will benefit from a larger market capitalisation of $1.7 billion. It will also enjoy “greater diversification into in-demand and value-added sectors through the combination of VIT’s Business Parks and Logistics assets and ESR-REIT’s General Industrial and High-Specs Industrial properties”, said the managers of VIT and ESR REIT in a statement.
“The wider product suite will position the enlarged trust to capture a larger segment of industrial tenants.”
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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