Singapore-listed Frasers Logistics & Industrial Trust has agreed to buy Frasers Commercial Trust for S$1.54bn (US$1.25bn) in a bid to grow its portfolio and boost its acquisition firepower.
Fraser Commercial Trust’s Alexandra Technopark asset in Singapore (source: Frasers Property)
Frasers Commercial owns a US$1.61bn portfolio of office and business park properties across Singapore, Australia and the UK.
The deal will grow FLT’s portfolio to US$4.18bn and will comprise logistics, industrial, office, business park and commercial assets across Asia Pacific, Europe and the US, according to a statement.
FLT, which is set to become one of the top 10 largest REITs by market cap in Singapore from the deal, will acquire all of Frasers Commercial’s shares through a combination of cash and stocks.
The deal is the latest in a wave of S-REIT mergers that started last year when ESR REIT and Viva Industrial Trust merged into a leading industrial trust.
Read our June ’19 feature: Singapore REITs poised for further consolidation
“The enlarged REIT will provide synergistic end-to-end business solutions for a wider customer base,” said Robert Wallace, CEO of FLT’s manager.
“It enhances our financial capacity and flexibility to pursue acquisitions through our expanded mandate and a [right of first refusal] pipeline in excess of S$5bn.”
FLT will manage 2.6m sq.m. of space across 98 properties with about 300 tenants following the deal, while also broadening its investment mandate.
The REIT managers believe the merger may improve FLT’s trading liquidity, attract a wider investor base and garner broader analyst coverage.
If the merger goes ahead, FLT has also agreed to buy the outstanding 50% stake in Farnborough Business Park in the UK from a Frasers Property subsidiary for S$157.7m.
Frasers Commercial already owns the other half of the asset.
“With the combined portfolio, we will be able to unlock synergies and explore new opportunities in the logistics, industrial and commercial sectors,” said Jack Lam, CEO of Frasers Commercial’s manager.
As the sponsor of both trusts, Frasers Property expects to own a 21.9% stake in FLT after the merger.
The S-REIT merger comes after Frasers Property announced plans to merge its logistics real estate businesses in Australia and Europe, as well as FLT’s asset and property management business, into a S$5.4bn (US$3.97bn) global logistics platform in July this year.
Listed and headquartered in Singapore, Frasers Property has S$37.6bn in assets under management.