Industrial REIT Giants Poised for $5.4bn Merger


Two of Australia’s largest industrial and logistics real estate investment trusts are poised to merge, creating the biggest industrial and logistics real estate platform in Asia Pacific.

ESR's logistics-based ESR-REIT and ARA Logos' ALOG announced the proposed merger, to form an Asia Pacific Singapore-listed ESR-LOGOS REIT (E-LOG).

E-LOG will hold a diversified portfolio of logistics, warehouse, high-specifications industrial properties, business parks and general industrial assets across Singapore and Australia worth about $5.4 billion.

The proposed merger comes hot on the heels of ESR’s announcement to acquire 100 per cent of the share capital of ARA Asset Management, which, through Logos, owns 100 per cent of the ALOG manager. The ESR-ARA transaction will create the largest real asset manager in APAC and the third-largest listed real estate investment manager globally with a combined assets under management of $176 billion.

ESR-REIT chief executive Adrian Chui said the merger would accelerate the REIT’s exposure to “in-demand logistics properties”.

“[This is] the largest secular growth opportunity in Asia, driven by the rapid rise of e-commerce and further amplified by paradigm shifts in global manufacturing supply chains,” Chui said.

“The proposed merger will also deepen our presence in key Singapore industrial clusters and expand our foothold in new economic hubs in Australia.

“With the combination of two best-in-class platforms with solid track records in value creation, more competitive and wider pools of capital as well as lower portfolio risks, the proposed merger will re-position and propel E-LOG towards an enhanced growth trajectory, backed by our sponsor, ESR Group.”

Chui said the merger would offer greater opportunity to acquire more properties and develop projects in the Asia Pacific region.

ALOG manager chief executive Karen Lee said the transaction would be a “win-win” for shareholders of both REITs.

“It is the next chapter in our transformational growth, delivering value accretion for our unitholders while positioning us for sustainable growth,” Lee said.

“The proposed merger will more than double ALOG’s size and propel E-LOG to become one of the top 10 largest SREITs by free float market capitalisation.

“E-LOG’s larger market capitalisation and free float is expected to lead to higher trading liquidity, increase its weightage in the FTSE EPRA Nareit Global Developed Index and thereby attract a larger base of institutional investors.

“Together, we are confident that we will be in an even stronger position to grow the combined platform and continue delivering long-term sustainable value to our combined group of unitholders.”

E-LOG will hold 87 portfolio properties, 20 of which are in Australia, and 41 fund properties in Australia, comprising a total net leasable area of 2.2 million sq m with a total asset value of about $5.4 billion.

The proposed merger will be effected through a trust scheme in compliance with the Singapore Code on Take-overs and Mergers, and is conditional upon the completion of ESR Cayman and ARA Asset Management’s merger.

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