Singapore’s ESR-REIT and Sabana REIT to merge in S$397m deal and other APAC REIT news

Singapore’s ESR-REIT (J91U) and Sabana REIT (M1GU) have announced plans to merge in a deal that will grow total assets to S$4.1bn, making it one of the top five industrial REITs in the country. 

ESR-REIT will acquire all of Sabana REIT’s shares in exchange for new ESR-REIT units in a deal that values Sabana REIT at S$396.9m, the companies said in a joint announcement. 

“We believe the merger will deepen our presence in Singapore and solidify the enlarged REIT’s position as the 5th largest industrial REIT in the country by asset size and the 4th largest by market share,” said Adrian Chui, CEO and executive director of the ESR-REIT manager. 

Sabana REIT shareholders will receive 94 new ESR-REIT units for every 100 Sabana units held. Following the merger, the sponsor ESR will hold a 12.2% interest in the enlarged REIT. 

The move comes after ESR-REIT merged with S-REIT Viva Industrial Trust in late 2018, growing to about S$3bn in assets under management at the time. 

There have been a string of S-REIT mergers over the past few years, as reported in our feature Singapore REITs poised for further consolidation, last year.

Shares in ESR-REIT and Sabana REIT closed flat at S$0.39 and S$0.36, respectively. 

The FTSE ST Real Estate Investment Trusts index dipped 1.21% to 825.33, and the Straits Times Index decreased 0.95% to 2,623.67. 

Australia

Charter Hall Group (CHC) has agreed to buy three industrial properties in Melbourne, Adelaide and Sydney from Owens-Illinois Australia (OIA) in a sale-leaseback deal worth A$215m. 

The Melbourne and Adelaide assets were purchased on behalf of the Charter Hall Prime Industrial fund, while the Sydney asset was bought for the Charter Hall Direct Industrial Fund No.4. 

As part of the sale and leaseback deal, OIA will occupy the properties on 20-year triple net leases, with fixed 3% annual rent reviews. 

The portfolio comprises three glass manufacturing plants and warehousing facilities, with about 146,000 sq.m. of total gross lettable area. 

“The $215m Owen-Illinois Australia transaction continues our momentum in securing sale and leaseback portfolios from major corporates and demonstrates the Group’s ability to use the combined capacity of its funds to close large transactions, quickly and efficiently within the desired timeframes of vendors,” said Charter Hall CIO Sean McMahon. 

Charter Hall shares closed 2% lower at A$9.80.

The S&P/ASX 200 A-REIT index slipped 1.41% to 1,216.90, while the S&P/ASX 200 index finished trading 0.69% lower at 6,010.90.

Japan

Hankyu Hanshin REIT Inc. (8977) reported a 5.7% rise in ordinary income to JPY 2.33bn for the six months to end-May 2020, according to its latest earnings. 

The company set its distribution per unit at JPY 3,039 for the period, and has forecast a 10.6% fall in ordinary income to JPY 2.09bn for the upcoming six-month period finishing in November 2020. 

Hankyu REIT shares finished trading 0.42% higher at JPY 120,100. 

The Tokyo Stock Exchange REIT index fell 0.91% to 1,659.34, as the Nikkei 225 index declined 0.76% to 22,770.36.

The biggest J-REIT swings were Invincible Investment Corp. (8963) shares, which dived 5.47% to JPY 26,620, and Heiwa Real Estate REIT Inc. (8966) stocks, which climbed 3.37% to JPY 101,200.

Hong Kong 

In Hong Kong, the Hang Seng REIT Index closed 0.57% lower at 5,555.25, while the Hang Seng Index tumbled 2% to 24,970.69.

Among the Hong Kong REITs, Sunlight REIT (435) shares rose 1.29% to HK$3.93, while Link REIT (823) stocks finished trading 1.53% lower at HK$61.20.

Avatar
Benn is a freelance journalist and the publisher of APAC Real Estate. He has reported for the Herald Sun, REFI Europe, S&P Global Market Intelligence, Leader Newspapers, and more.