IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934:1" rel="noopener">ESR-REIT (EREIT SP)</a> announced the proposed merger with <a href="https://www.smartkarma.com/entities/ara-logos-logistics-trust" target="_blank" data-smartkarma-citation="entities:937:1" rel="noopener">ARA LOGOS (ALLT SP)</a> by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). </p><p>The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by <a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.</p><p>A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). </p><div class="content-highlight"><p>As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.</p></div>

ESR-REIT (EREIT SP) announced the proposed merger with ARA LOGOS (ALLT SP) by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by ESR Cayman (1821 HK) for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.

ESR-REIT’s Proposed Merger with ARA LOGOS

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

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<p><a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934:1" rel="noopener">ESR-REIT (EREIT SP)</a> and <a href="https://www.smartkarma.com/entities/ara-logos-logistics-trust" target="_blank" data-smartkarma-citation="entities:937:1" rel="noopener">ARA LOGOS (ALLT SP)</a> (ALOG) have <a href="https://links.sgx.com/FileOpen/ALOG%20-%20Joint%20Announcement%20-%20Proposed%20Merger%20with%20ESR-REIT%20by%20way%20of%20a%20Trust%20Scheme%20of%20Arrangement.ashx?App=Announcement&amp;FileID=686935" target="_blank" rel="noopener">proposed</a> a S$1.4bn merger, where ESR-Reit will acquire all of ALOG's units in a cash &amp; scrip transaction by way of a Scheme.</p>
<p>ALOG unitholders will receive an indicative Scheme Consideration of S$0.95/ALOG unit,  comprising S$0.095 in cash and 1.6765 new ESR-Reit units, to be issued at S$0.51/unit. However, if using ESR's last closing price, the implied Offer is $0.8746/unit, or a 6.46% discount last close. </p>
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<p>That discount to the undisturbed is less than inspiring. However, the indicative Offer Price is a six-year high, you're receiving 90% of the consideration in scrip, and the exchange ratio is in line with the 12-month average. That's probably enough to get it over the line </p>
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<p>More below the fold.</p>
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ESR-REIT (EREIT SP) and ARA LOGOS (ALLT SP) (ALOG) have proposed a S$1.4bn merger, where ESR-Reit will acquire all of ALOG's units in a cash &amp; scrip transaction by way of a Scheme.
ALOG unitholders will receive an indicative Scheme Consideration of S$0.95/ALOG unit,  comprising S$0.095 in cash and 1.6765 new ESR-Reit units, to be issued at S$0.51/unit. However, if using ESR's last closing price, the implied Offer is $0.8746/unit, or a 6.46% discount last close. 


That discount to the undisturbed is less than inspiring. However, the indicative Offer Price is a six-year high, you're receiving 90% of the consideration in scrip, and the exchange ratio is in line with the 12-month average. That's probably enough to get it over the line 


More below the fold.









ARA Logos (ALLT SP) To Merge with ESR-REIT (EREIT SP)

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<p>SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.</p><p>We have looked at the background of the deal in our previous note,<a href="https://www.smartkarma.com/insights/sf-reit-pre-ipo-one-trick-pony-who-s-not-doing-the-trick" target="_blank" rel="noopener"> SF REIT Pre-IPO -One trick pony, who’s not doing the trick</a>.</p><p>In this note, we’ll run the deal through our ECM framework and talk about valuations.</p>

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.We have looked at the background of the deal in our previous note, SF REIT Pre-IPO -One trick pony, who’s not doing the trick.In this note, we’ll run the deal through our ECM framework and talk about valuations.

SF REIT IPO - Don’t See a Clear Reason to Buy

<p>SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$300m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.</p><p>At the time of listing, SFREIT will own three properties located in Hong Kong, Foshan and Wuhu, all of which are modern logistics properties. The assets have an aggregated gross lettable area of approximately 307,617.5 sqm with an appraised value of HK$6.1bn, as at Mar 2021. The average occupancy of the properties was 95.3%, with a weighted average age of 3.5 years and weighted average remaining land tenure of 37.9 years.</p>

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$300m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.At the time of listing, SFREIT will own three properties located in Hong Kong, Foshan and Wuhu, all of which are modern logistics properties. The assets have an aggregated gross lettable area of approximately 307,617.5 sqm with an appraised value of HK$6.1bn, as at Mar 2021. The average occupancy of the properties was 95.3%, with a weighted average age of 3.5 years and weighted average remaining land tenure of 37.9 years.

SF REIT Pre-IPO - One Trick Pony, Who’s Not Doing the Trick

<p><a href="https://www.smartkarma.com/entities/sf-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:31496:1" rel="noopener">SF Real Estate Investment Trust (SF HK)</a> is a REIT formed with an initial focus on income-generating logistics properties in Hong Kong and China. The sponsor is <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>. SF REIT will be the first logistics-focused REIT to be listed in Hong Kong. It will start pre-marketing an HKEx IPO to raise $300 million, according to press reports. </p><div class="content-highlight"><p>SF REIT’s portfolio comprises three properties which are modern logistics properties in Hong Kong and China. The properties are Hong Kong Property, Foshan Property and Wuhu Property. SF REIT’s largest property by value is the Hong Kong Property, which accounts for 87% of the portfolio value. Overall, we believe that SF REIT offers an attractive proposition for investors willing to invest in a niche segment of the Asian REIT sector.</p></div>

SF Real Estate Investment Trust (SF HK) is a REIT formed with an initial focus on income-generating logistics properties in Hong Kong and China. The sponsor is S.F. Holding (002352 CH). SF REIT will be the first logistics-focused REIT to be listed in Hong Kong. It will start pre-marketing an HKEx IPO to raise $300 million, according to press reports. SF REIT’s portfolio comprises three properties which are modern logistics properties in Hong Kong and China. The properties are Hong Kong Property, Foshan Property and Wuhu Property. SF REIT’s largest property by value is the Hong Kong Property, which accounts for 87% of the portfolio value. Overall, we believe that SF REIT offers an attractive proposition for investors willing to invest in a niche segment of the Asian REIT sector.

SF REIT IPO Initiation: The REIT Flow of Things

Singapore

SPH REIT is a Singapore-based REIT established principally to invest, directly or indirectly, in a portfolio of income-producing real estate which is used primarily for retail purposes in Asia-Pacific, as well as real estate-related assets.

Parkway Life Real Estate Investment Trust (Parkway Life REIT) invests primarily in income producing real estate and real estate related assets in the Asia Pacific region. The trust's real estate is used primarily for healthcare and healthcare-related purposes.

OUE Commercial Real Estate Investment Trust (“OUE C-REIT”) is one of the largest diversified Singapore REITs (“S-REITs”) with total assets of S$6.0 billion as at 31 December 2022. With seven properties across the commercial and hospitality segments in Singapore and Shanghai, the property portfolio comprises more than 2.1 million square feet of prime office and retail space, and 1,643 upper upscale hotel rooms.

OUE C-REIT invests in income-producing real estate used primarily for commercial purposes (including real estate used primarily for office and/or retail purposes) in financial and business hubs, hospitality and/or hospitality-related purposes, as well as real estate-related assets.

Fortune REIT is a real estate investment trust that invests in a portfolio of retail shopping malls located in Hong Kong.

CDL Hospitality Trusts is a stapled group compromising H-REIT and HBT. H-REIT is a real estate investment trust that invest in a portfolio of income-producing properties and HBT is a business trust.

Starhill Global REIT is a real estate investment trust.  The trust invests in retail and office buildings in Singapore and overseas.

Far East Hospitality Trust is a hospitality stapled group comprising Far East H-REIT and Far East H-BT. Far East H-REIT is a Singapore-based real estate investment trust, which invests in hospitality assets and Far East H-BT, a Singapore-based business trust which will be dormant as of the Listing Date.

Cromwell Real Estate Investment Trust is a real estate investment trust with a commercial portfolio of offices and light industrial /  logistics assets across Europe.

Keppel DC REIT is Asia's first pure-play data centre REIT listed on the Singapore Exchange. Keppel DC REIT's investment strategy is to principally invest, directly or indirectly, in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes, as well as real estate related assets.

Suntec Real Estate Investment Trust is a commercial real estate investment trust. The Trust invests in income-producing real estate that is primarily used for retail and/or office purposes.

MORI HILLS REIT INVESTMENT CORPORATION is a real estate investment trust (REIT). The Company invests in real estate properties such as commercial and office buildings.

Mori Hills REIT Investment Corporation (3234 JP)

Retail Opportunity Investments Corp. is a fully integrated and self-managed real estate investment trust ("REIT").  The Company specializes in the acquisition, ownership and management of necessity-based community, and neighborhood shopping centers in the western and eastern regions of the United States anchored by national and regional supermarkets and drugstores.

Retail Opportunity Investments Corp. (ROIC US)

American Assets Trust Inc. is a full service, vertically integrated and self-administered real estate investment trust, or REIT. The Company owns, operates, acquires and develops retail and office properties in markets primarily in Southern California, Northern California and Hawaii.

Comforia Residential REIT, Inc. is a real estate investment trust (REIT). The company invests in leasing city apartments mainly in Tokyo area.

MORI TRUST Sogo Reit, Inc. is a real estate investment trust (REIT), which invests in income producing properties.  The Company mainly invests in office buildings in metropolitan area and local cities.

Getty Realty Corporation owns and leases properties in the Northeastern and Middle Atlantic states. These properties, consisting of service stations, convenience stores and petroleum marketing terminals are leased to Getty Petroleum Marketing Inc. Getty Realty Holding is also a marketer of heating oil in Pennsylvania and Maryland.

Activia Properties, Inc. is a real estate investment trust (J-REIT). The company mainly invests in commercial and office buildings in the Tokyo metropolitan area.

DiamondRock Hospitality Company is a self-advised real estate investment trust. The Company owns, acquires, and invests in upper scale and upscale hotel properties located in North America.  DiamondRock also invests in premium limited-service and extended-stay hotel properties in urban locations.

RLJ Lodging Trust is a self-advised and self-administered Maryland real estate investment trust. The Trust invests primarily in premium-branded, focused-service and compact full-service hotels. RLJ Lodging owns hotels in multiple states and the District of Columbia.

Empire State Realty Trust Inc. is a real estate investment trust. The trust owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area.

ESR-LOGOS Real Estate Investment Trust (“ESR-LOGOS REIT”) is a leading New Economy and future-ready Asia Pacific S-REIT. Listed on the Singapore Exchange Securities Trading Limited since 25 July 2006, ESR-LOGOS REIT invests in quality income-producing industrial properties in key gateway markets.

As at 28 April 2022, ESR-LOGOS REIT holds interests in a diversified portfolio of logistics properties, high-specifications industrial properties, business parks and general industrial properties with total assets of approximately S$5.5 billion. Its portfolio comprises 84 properties located across the developed markets of Singapore (63 assets) and Australia (21 assets), with a total gross floor area of approximately 2.4 million sqm, as well as investments in three property funds in Australia. ESR-LOGOS REIT is also a constituent of the FTSE EPRA Nareit Global Real Estate Index. 

ESR-LOGOS REIT is managed by ESR-LOGOS Funds Management (S) Limited (the “Manager”) and sponsored by the ESR Group (“ESR”). The Manager is owned by ESR (67.3%), Shanghai Summit Pte. Ltd. (25.0%), and Mitsui & Co., Ltd (7.7%), respectively.

For further information on ESR-LOGOS REIT, please visit www.esr-logosreit.com.sg.

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ESR-LOGOS REIT (EREIT SP)

ESR-REIT’s Proposed Merger with ARA LOGOS

A key issue is on pricing particularly the EREIT issue price of S$0.510, based on EREIT’s 52-week high. While short-term pricing concerns will...

Arun George

ARA Logos (ALLT SP) To Merge with ESR-REIT (EREIT SP)

On balance, there's probably enough here for the deal to get up. But the recent voting for Soilbuild does lend an element of risk. But at this...

David Blennerhassett

SF REIT IPO - Don’t See a Clear Reason to Buy

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF...

Sumeet Singh

SF REIT Pre-IPO - One Trick Pony, Who’s Not Doing the Trick

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$300m in its Hong Kong IPO. SF REIT is sponsored by SF...

Sumeet Singh

SF REIT IPO Initiation: The REIT Flow of Things

SF REIT will start pre-marketing an HKEx IPO to raise $300 m. SF REIT offers an attractive proposition for investors willing to invest in a niche...

Arun George

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