Two Singapore-listed real estate trusts announce $5.7 billion merger plan
Two Singapore-listed real estate investment trusts under the Frasers Property group said on Monday they planned to merge to create an entity that will hold assets worth $5.7 billion.
The proposed merger of Frasers Logistics & Industrial Trust and Frasers Commercial Trust, the latest in a string of consolidation moves in the sector, will cost about $1.5 billion, mainly through the issuance of new units to existing investors.
"The enlarged Reit will have a broadened investment mandate to invest in a wider spectrum of asset classes across logistics, industrial, office, business park and commercial properties," the two trusts said in a joint statement.
The new entity will manage about 2.6 million sq m of space with about 300 tenants in 98 properties spread across five countries, the companies added.
The proposal is subject to approval from existing investors and the Singapore High Court.
The merger is at the least the fourth such tie-up among Singapore-listed Reits this year. Benefits include the ability to consolidate management expertise and build a bigger war chest for acquisitions.
A combined Frasers Logistics and Frasers Commercial would also likely have an improved cost of capital, enabling it to compete more effectively on a global stage, said CGS-CIMB Securities analyst Lock Mun Yee, who rates both Reits a buy, The Business Times reported.
Both trusts are currently managed by subsidiaries of Frasers Property. - REUTERS