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Warburg Pincus-backed REIT to buy rival in Singapore's first REIT merger

Reuters  |  SINGAPORE 

(Reuters) - will buy rival in a proposed deal valued at S$936.7 million, marking the first consolidation among Singapore's

The proposed merger will create the fourth largest industrial REIT in with about S$3.0 billion ($2.23 billion) in assets, the two firms said in a joint statement on Friday.

Under deal terms, Viva security holders will receive S$0.96 per stapled security, which will be paid 10 percent in cash and 90 percent through the issue of new units. The proposed deal represents an 8 percent premium to Viva's closing price on Thursday.

Talks have been ongoing for months as ESR-REIT, which is backed by Asian logistics developer e-Shang Redwood (ESR) - a venture of firm and global investors, saying in January its submitted a proposal to merge it with Viva.

The property portfolio of both companies comprise general industrial, logistics, warehouses and business parks.

Analysts say Singapore's sector is ripe for consolidation as it is crowded with smaller companies finding it challenging to grow in the last few years.

"Size does matter in REITs," said Adrian Chui, of ESR-REIT, adding the deal will help create a sizeable and more liquid REIT, backed by a strong developer-sponsor. It remained open to evaluating more partnerships, he said.

Trading in units of both ESR-REIT, which has a market capitalisation of about S$830 million ($618 million), and Viva, valued at about S$865 million, were halted ahead of the

The of will also buy Viva's for S$62 million.

Citigroup Global Markets Pte Ltd, and are the financial advisers to the ESR-REIT manager. BofA Merrill Lynch is the to Viva managers.

(Reporting by Aradhana Aravindan, Editing by Sherry Jacob-Phillips, Bernard Orr)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, May 18 2018. 12:24 IST