ESR-REIT: Sets effective date for merger with Viva Industrial Trust

Singapore five-dollar note Photo by Leslie Shaffer

ESR-REIT’s manager said on Monday that it set the effective date for its merger with Viva Industrial Trust for Monday, with the issue of consideration units set for 17 October and the delisting on 22 October.

“The enlarged trust is expected to gain from the economies of scale of a larger portfolio, stronger bargaining power with service providers, and enjoy greater flexibility to undertake asset enhancement and redevelopment initiatives,” ESR-REIT’s manager, ESR Funds management (S), said in a statement filed to SGX before the market open on Monday.

“The larger, fully-unencumbered portfolio with increased debt tenor is expected to provide greater access to pools of capital and a lower cost of debt,” it said.

The trust manager also pointed to an increased post-merger market capitalization, free float and likely higher trading liquidity which should attract a larger investor base, potentially lead to more index inclusion and increased analyst coverage.

The merger, which the statement said was the first-ever merger of two Singapore REITs into an enlarged trust, is expected to create the fourth largest industrial REIT listed in Singapore, with a combined asset size of around S$3.0 billion and a more diversified portfolio across five sub-asset classes: Business parks, high-spec industrial assets, logistics & warehouse, general industrial and light industrial, it said.

It will have 56 properties and a total gross floor area of 13.6 million square feet, it said.

The merged trust will also have ESR Group, a pan-Asian logistics property developer, operator and fund manager, as a sponsor, giving the trust the opportunity to acquire from ESR Group’s asset pipeline, it said.

In addition, RBC Investor Services Trust Singapore, as trustee of ESR-REIT, entered a S$700 million unsecured loan facility agreement with UOB, RHB Bank, HSBC and Malayan Banking’s Singapore branch, it said.

The proceeds will be used to partially refinance existing loan facilities to ESR-REIT’s trustee, to refinance in full Viva Industrial Trust’s existing loan facilities and S$500 million multicurrency medium term note program, partly finance the cash consideration for the merger and to pay the costs of ESR-REIT’s trustee for the merger, it said.

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