APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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

Daiwa House Logistics Trust / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/daiwa-house-logistics-trust" target="_blank" data-smartkarma-citation="entities:35020:1" rel="noopener">Daiwa House Logistics Trust (DHLT SP)</a>, a Japan pure-play logistics REIT, is looking to raise US$343m in its Singapore IPO.</li>
<li>As of Jun 2021, its assets had an aggregate net lettable area (NLA) of 423,920 sqm and had an appraised valuation of approximately JPY80,570m (S$952.9m).</li>
<li>As of Oct 2021, portfolio occupancy stood at 96.3% and its assets had a weighted average lease expiry (WALE) of 7.2 years.</li>
</ul>



Daiwa House Logistics Trust (DHLT SP), a Japan pure-play logistics REIT, is looking to raise US$343m in its Singapore IPO.
As of Jun 2021, its assets had an aggregate net lettable area (NLA) of 423,920 sqm and had an appraised valuation of approximately JPY80,570m (S$952.9m).
As of Oct 2021, portfolio occupancy stood at 96.3% and its assets had a weighted average lease expiry (WALE) of 7.2 years.


Daiwa House Logistics Trust Pre-IPO - Muted Forecasts and Gearing Could Affect Growth Potential

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

Lendlease Global Commercial REIT / Equity Bottom-Up

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 <img src='https://api2.sgx.com/sites/default/files/2021-11/Capture.PNG' alt='Top performer SREIT and property' />
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 <div class='content-caption'>Top performer SREIT and property</div>
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In the year to date, Singapore-listed Reits and property trusts averaged total returns of close to 11 per cent. The 10 best-performing trusts were mostly mid-caps, which averaged 32 per cent total returns and own assets across industrial, retail, healthcare, office and hospitality sub-segments.

Among the 10 best performers, seven were recent inclusions into the FTSE EPRA Nareit Global Developed Index following the September review. 
The five trusts which received the highest amount of net institutional inflows this year were mid-cap REITs (data as of 28 October): ARA LOGOS Logistics Trust (+S$79 million), OUE Commercial REIT (+S$39 million), Starhill Global REIT (+S$36 million), Lendlease Global Commercial REIT (+S$27 million) and ESR-REIT (+S$26 million). 
In the month of October, the sector averaged 3 per cent in total returns. Retail investors net bought the sector with net inflows of S$158 million while institutional investors net sold S$195 million (data as at Oct 28). 
Four of the top five performers over the month were trusts with exposure to the retail or hospitality segments - Dasin Retail Trust (21 per cent), CDL Hospitality Trusts (15 per cent), Ascott Residence Trust (11 per cent), Lippo Malls Indonesia Retail Trust (8 per cent) and Keppel REIT (7 per cent). Three of them reported before market opened last Friday. 
CDLHT reported year-on-year (yoy) growth of 34.8 per cent in net property income for Q3 2021 attributable to the ongoing recovery from negative effects of the pandemic, broader distribution of vaccines as well as easing of travel restrictions which resulted in more accommodation demand. 
LMIRT declared Q3 2021 distribution per unit (DPU) of 0.09 cents, up 28.6 per cent yoy. The trust's rental revenue and gross revenue for the period grew 16.2 per cent and 7.0 per cent yoy respectively, due to income from the newly acquired Lippo Mall Puri, which contributed S$8.2 million to rental revenue and S$10.3 million to gross revenue for the quarter.

Keppel Reit reported 20.8 per cent yoy growth in distributable income from operations for the nine months of 2021, due mainly to contributions from Victoria Police Centre in Melbourne, Pinnacle Office Park in Sydney and Keppel Bay Tower in Singapore. The Reit noted that despite the pandemic, portfolio leasing activities remained positive with new leases and expansions seen from diverse industry sectors.

Aside from the three trusts above, more than half of the 40 S-Reits have also released financial results or business updates, before market opened last Friday.

Most of the trusts reported financial and operating metrics which were in line with analysts' estimates, with some exceeding expectations.

Among the trusts that have reported, 14 of them declared DPUs for the latest quarter or half year period. These trusts, on average, saw a 20 per cent year-on-year growth in declared DPUs. Some reasons provided for the increase in DPUs across these trusts include new acquisitions which boosted revenues, lower rental rebates which reduced expense and gradual reopening across the globe. REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/retail-and-hospitality-sector-s-reits-outperform-in-october"> read </a>the original version.
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    Top performer SREIT and property


In the year to date, Singapore-listed Reits and property trusts averaged total returns of close to 11 per cent. The 10 best-performing trusts were mostly mid-caps, which averaged 32 per cent total returns and own assets across industrial, retail, healthcare, office and hospitality sub-segments.

Among the 10 best performers, seven were recent inclusions into the FTSE EPRA Nareit Global Developed Index following the September review.  
The five trusts which received the highest amount of net institutional inflows this year were mid-cap REITs (data as of 28 October): ARA LOGOS Logistics Trust (+S$79 million), OUE Commercial REIT (+S$39 million), Starhill Global REIT (+S$36 million), Lendlease Global Commercial REIT (+S$27 million) and ESR-REIT (+S$26 million).  
In the month of October, the sector averaged 3 per cent in total returns. Retail investors net bought the sector with net inflows of S$158 million while institutional investors net sold S$195 million (data as at Oct 28).  
Four of the top five performers over the month were trusts with exposure to the retail or hospitality segments - Dasin Retail Trust (21 per cent), CDL Hospitality Trusts (15 per cent), Ascott Residence Trust (11 per cent), Lippo Malls Indonesia Retail Trust (8 per cent) and Keppel REIT (7 per cent). Three of them reported before market opened last Friday.  
CDLHT reported year-on-year (yoy) growth of 34.8 per cent in net property income for Q3 2021 attributable to the ongoing recovery from negative effects of the pandemic, broader distribution of vaccines as well as easing of travel restrictions which resulted in more accommodation demand.  
LMIRT declared Q3 2021 distribution per unit (DPU) of 0.09 cents, up 28.6 per cent yoy. The trust's rental revenue and gross revenue for the period grew 16.2 per cent and 7.0 per cent yoy respectively, due to income from the newly acquired Lippo Mall Puri, which contributed S$8.2 million to rental revenue and S$10.3 million to gross revenue for the quarter.

Keppel Reit reported 20.8 per cent yoy growth in distributable income from operations for the nine months of 2021, due mainly to contributions from Victoria Police Centre in Melbourne, Pinnacle Office Park in Sydney and Keppel Bay Tower in Singapore. The Reit noted that despite the pandemic, portfolio leasing activities remained positive with new leases and expansions seen from diverse industry sectors.

Aside from the three trusts above, more than half of the 40 S-Reits have also released financial results or business updates, before market opened last Friday.

Most of the trusts reported financial and operating metrics which were in line with analysts' estimates, with some exceeding expectations.

Among the trusts that have reported, 14 of them declared DPUs for the latest quarter or half year period. These trusts, on average, saw a 20 per cent year-on-year growth in declared DPUs. Some reasons provided for the increase in DPUs across these trusts include new acquisitions which boosted revenues, lower rental rebates which reduced expense and gradual reopening across the globe.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Retail and hospitality sector S-Reits outperform in October

Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Headquartered in Singapore, SooChow CSSD Capital Markets (Asia) is an investment bank focusing on emerging growth companies across Asia, providing a full suite of investment banking services, including corporate finance, mergers and acquisitions advisory, equity capital markets, institutional equities sales and trading and equities research.

SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2>SREITs results in a glance (see detailed spreadsheet and calendar attached)<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/882/original/image_38758426221635344719889.png?1635344723" class="editor-image img-responsive" data-smartkarma-image-id="237882"></figure><h3><a href="https://www.smartkarma.com/entities/frasers-centrepoint-trust" target="_blank" data-smartkarma-citation="entities:2870" rel="noopener">Frasers Centrepoint Trust (FCT SP)</a> 2H21 DPU +39.3% YoY; Resilient occupancy and tenants’ sales amidst Phase-2 temporary setbacks</h3>2H21 revenue and NPI surged by 159.9% and 213.2% YoY, respectively, to S$167.5m and S$120.9m, mainly boosted by ARF acquisition. This brought FY21 revenue and NPI to S$341.2m (+107.5% YoY) and S$246.6m (+122.4%) or 96%/98% of BBG estimates, respectively. On a HoH basis, 2H21 revenue and NPI fell 3.5% and 3.8%, respectively, due to rental rebates provided to tenants in Sep21

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached)Frasers Centrepoint Trust (FCT SP) 2H21 DPU +39.3% YoY; Resilient occupancy and tenants’ sales amidst Phase-2 temporary setbacks2H21 revenue and NPI surged by 159.9% and 213.2% YoY, respectively, to S$167.5m and S$120.9m, mainly boosted by ARF acquisition. This brought FY21 revenue and NPI to S$341.2m (+107.5% YoY) and S$246.6m (+122.4%) or 96%/98% of BBG estimates, respectively. On a HoH basis, 2H21 revenue and NPI fell 3.5% and 3.8%, respectively, due to rental rebates provided to tenants in Sep21

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
After ARA Asset Management <a href="https://www.asx.com.au/asxpdf/20180308/pdf/43s8dgxs8plthf.pdf" target="_blank" rel="noopener">acquired</a> a 19.5% stake in <a href="https://www.smartkarma.com/entities/cromwell-property-group" target="_blank" data-smartkarma-citation="entities:2780:1" rel="noopener">Cromwell Property (CMW AU)</a> on the 7 March 2018, the relationship between the two became increasingly acrimonious. This was discussed in <a href="https://skr.ma/x55u7" target="_blank" rel="noopener">Cromwell/ARA: A Festering Relationship</a>.
ARA finally <a href="https://www.asx.com.au/asxpdf/20200623/pdf/44jw1gy2d3dqg4.pdf" target="_blank" rel="noopener">announced</a> a proportional off-market takeover bid to acquire 29% of shares out in CMW, not already owned, which subsequently turned <a href="https://www.asx.com.au/asxpdf/20200824/pdf/44lsvxks2gjc60.pdf" target="_blank" rel="noopener">unconditional</a>, and ARA proceeded to appoint its own people to the board - appointments that had previously been blocked by Cromwell.
On the 4 August, <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> <a href="https://links.sgx.com/FileOpen/202108_01%20Major%20and%20Connected%20Transaction%20in%20Relation%20to%20the%20Proposed%20Acquisition%20of%20ARA%20Asset%20Managament%20Limited.ashx?App=Announcement&amp;FileID=677405" target="_blank" rel="noopener">announced</a> it was acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn. (<a href="https://skr.ma/fJECF" target="_blank" rel="noopener">ESR Cayman (1821 HK) Takes Out ARA Asset Management</a>)
On the 14 October, <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) <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 - see <a href="https://skr.ma/wqrQU" target="_blank" rel="noopener">ARA Logos (ALLT SP) To Merge with ESR-REIT (EREIT SP)</a>. ALOG is managed by ARA LOGOS Logistics Trust Management Limited, a wholly-owned subsidiary of LOGOS. ARA Asset Management Limited is a majority shareholder of LOGOS, which operates as ARA’s logistics real estate platform. ESR Funds Management Limited, the manager of ESR-Reit, is owned by ESR Cayman Limited (67.3%).
On Irongate
Back on the 28 January of this year, <a href="https://www.smartkarma.com/entities/360-capital-reit" target="_blank" data-smartkarma-citation="entities:29046:1" rel="noopener">360 Capital REIT (TOT AU)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02335484-2A1277317?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">acquired</a> a 9.18% stake in <a href="https://www.smartkarma.com/entities/irongate-group" target="_blank" data-smartkarma-citation="entities:30897:1" rel="noopener">Irongate Group (IAP AU)</a> for $78.6mn, or ~A$1.40/security.  Together with <a href="https://www.smartkarma.com/entities/360-capital-group-ltd" target="_blank" data-smartkarma-citation="entities:11865:1" rel="noopener">360 Capital (TGP AU)</a>, that stake was bumped to 15.08% on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02361516-2A1291600?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">8 April</a>, 16.26% on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02380390-2A1301075?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">28 May</a>, 17.34% on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02384090-2A1303268?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">9 June</a>, &amp; 19.11% on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02398322-2A1311372?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">20 July</a>. This was split 12.84% &amp; 6.27% between TOT &amp; TGP. 
IAP also placed out 34mn shares at A$1.47/security on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02384942-2A1303629?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">16 June</a>. 
An AGM notice was issued on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02401181-2A1312628?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">30 July</a>, in which it detailed 360 Capital's nomination of Tony Pitt and James Storey to the board. The board recommended shareholders vote against these two board nominations. 360 Capital attempted to withdraw its nominations on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02413122-2A1318981?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">26 August</a>, but IAP said it was too late. At the AGM on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02415982-2A1320409?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">31 August</a>, those two appointments were voted down. 
The New News
IAP <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02436879-2A1331471?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> this morning it has it received an unsolicited, highly conditional, and indicative non-binding proposal from 360 Capital REIT and <a href="https://www.smartkarma.com/entities/360-capital-group-ltd" target="_blank" data-smartkarma-citation="entities:11865:1" rel="noopener">360 Capital (TGP AU)</a>, the REIT's largest shareholder, by way of a Scheme.
The consideration price is A$1.6047/security, in cash, or a headline price of A$1.65 less the anticipated distribution of A$0.0453/security for the half-year ended 30 September 2021.
360 Capital currently holds 128.97mn securities or 19.99%. 
The indicative proposal is also conditional on "one or more of ESR Real Estate (Australia) Pty Ltd or its affiliate’s managed funds (together, ESR Australia) entering into an agreement with 360 Capital to purchase an undisclosed number of selected assets from IAP’s portfolio on terms yet to be agreed".
Hardly a clean approach. This is leaning towards a Hostile Offer. 
</div>
<div>
More below the fold.
</div>


After ARA Asset Management acquired a 19.5% stake in Cromwell Property (CMW AU) on the 7 March 2018, the relationship between the two became increasingly acrimonious. This was discussed in Cromwell/ARA: A Festering Relationship.
ARA finally announced a proportional off-market takeover bid to acquire 29% of shares out in CMW, not already owned, which subsequently turned unconditional, and ARA proceeded to appoint its own people to the board - appointments that had previously been blocked by Cromwell.
On the 4 August, ESR Cayman (1821 HK) announced it was acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn. (ESR Cayman (1821 HK) Takes Out ARA Asset Management)
On the 14 October, ESR-REIT (EREIT SP) and ARA LOGOS (ALLT SP) (ALOG) 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 - see ARA Logos (ALLT SP) To Merge with ESR-REIT (EREIT SP). ALOG is managed by ARA LOGOS Logistics Trust Management Limited, a wholly-owned subsidiary of LOGOS. ARA Asset Management Limited is a majority shareholder of LOGOS, which operates as ARA’s logistics real estate platform. ESR Funds Management Limited, the manager of ESR-Reit, is owned by ESR Cayman Limited (67.3%).
On Irongate
Back on the 28 January of this year, 360 Capital REIT (TOT AU) acquired a 9.18% stake in Irongate Group (IAP AU) for $78.6mn, or ~A$1.40/security.  Together with 360 Capital (TGP AU), that stake was bumped to 15.08% on the 8 April, 16.26% on the 28 May, 17.34% on the 9 June, &amp; 19.11% on the 20 July. This was split 12.84% &amp; 6.27% between TOT &amp; TGP. 
IAP also placed out 34mn shares at A$1.47/security on the 16 June. 
An AGM notice was issued on the 30 July, in which it detailed 360 Capital's nomination of Tony Pitt and James Storey to the board. The board recommended shareholders vote against these two board nominations. 360 Capital attempted to withdraw its nominations on the 26 August, but IAP said it was too late. At the AGM on the 31 August, those two appointments were voted down. 
The New News
IAP announced this morning it has it received an unsolicited, highly conditional, and indicative non-binding proposal from 360 Capital REIT and 360 Capital (TGP AU), the REIT's largest shareholder, by way of a Scheme.
The consideration price is A$1.6047/security, in cash, or a headline price of A$1.65 less the anticipated distribution of A$0.0453/security for the half-year ended 30 September 2021.
360 Capital currently holds 128.97mn securities or 19.99%. 
The indicative proposal is also conditional on "one or more of ESR Real Estate (Australia) Pty Ltd or its affiliate’s managed funds (together, ESR Australia) entering into an agreement with 360 Capital to purchase an undisclosed number of selected assets from IAP’s portfolio on terms yet to be agreed".
Hardly a clean approach. This is leaning towards a Hostile Offer. 


More below the fold.


Irongate (IAP AU): 360 Capital's Tilt Reminiscent Of ARA/Cromwell Stoush

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.

<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). 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.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). <div class="content-highlight">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.</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

Singapore

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)

Daiwa House Logistics Trust Pre-IPO - Muted Forecasts and Gearing Could Affect Growth Potential

Daiwa House Logistics Trust (DHLT SP), a Japan pure-play logistics REIT, is looking to raise US$343m in its Singapore IPO.

Clarence Chu

REIT Watch - Retail and hospitality sector S-Reits outperform in October

In the year to date, Singapore-listed Reits and property trusts averaged total returns of close to 11 per cent. The 10...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (27Oct21)

FCT temporary hiccups; EREIT persistent negative reversions; MINT boosted by US acquisitions; LMRT early signs of recovery; FIRT performance...

SCCM Asia Research

Irongate (IAP AU): 360 Capital's Tilt Reminiscent Of ARA/Cromwell Stoush

$1.65/security appears a fair price - IAP stops short of saying otherwise. But this is not a clean Offer, nor is it friendly. Despite the non...

David Blennerhassett

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

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