Thu, Nov 12, 2020 – 12:16 PM

THE respective independent financial advisers (IFAs) appointed by the managers of ESR-Reit and Sabana Shari’ah Compliant Industrial Reit (Sabana Reit) have advised the Reits’ directors to recommend that unitholders vote in favour of the merger.

Appointments of Rothschild & Co – ESR-Reit’s IFA, and Deloitte & Touche Corporate Finance – Sabana Reit’s IFA, were made in response to recent events surrounding the proposed merger of Sabana Reit and ESR-Reit at the current terms of 0.94 ESR-Reit unit for one Sabana Reit unit.

An ESR-Reit circular to unitholders dated Nov 12 noted that Rothschild is of the opinion that the merger is on “normal commercial terms and is not prejudicial to the interests of ESR-Reit and minority unitholders”.

This was done after taking into consideration factors including liquidity analysis as well as the historical market performance and trading activity of the units of both Reits, trailing price to net asset value (P/NAV) multiples of the Reits’ units over the last 36 months relative to the P/NAV implied by the merger, and the valuation multiples of selected Singapore-listed industrial S-Reits which are broadly comparable with ESR-Reit and Sabana Reit relative to those implied by the merger.

As such, the IFA has advised that the ESR-Reit manager’s audit, risk management and compliance committee, and its recommending directors, recommend that unitholders vote in favour of the merger.

Similarly, as detailed in a Sabana Reit scheme document the same day, Deloitte said the “financial terms of the merger are fair and reasonable”, and advised that the Reit’s independent directors recommend that its unitholders vote in favour of the scheme resolution.

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It had also taken into consideration the rationale for the merger and that given how the merger is expected to be distribution per unit accretive and net asset value dilutive for Sabana Reit’s unitholders, “aggregate leverage is expected to increase” for them, among other factors.



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