Frasers merges two Singapore REITs in $1.1b deal

Frasers Tower. Source: Frasers Property

Frasers Logistics & Industrial Trust has agreed to buy Frasers Commercial Trust in an S$1.5 billion ($1.1 billion) deal, giving it greater ammunition to make acquisitions amid a spate of consolidation among Singapore’s real estate investment trusts.

Combined, the group will have about S$5.7 billion of assets, propelling it into the city-state’s top 10 REITs, according to a statement Monday. With about 100 properties across Singapore, Australia and Europe, including warehouses, offices and business parks, the merged firm’s market value will almost double to about S$4.2 billion.

Under the merger, Frasers Logistics will acquire all of Frasers Commercial’s shares through a combination of cash and shares.

The merger is at the least the fourth 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 has a buy rating on both REITs.

The takeover action kicked off in January when CapitaLand Ltd. struck a S$6 billion deal with Temasek Holdings Pte to combine Ascendas Pte and Singbridge Pte. OUE Commercial REIT in April agreed to buy OUE Hospitality Trust. And in July, Ascott Residence Trust and Ascendas Hospitality Trust agreed to create the largest hospitality trust in the Asia-Pacific region, with S$7.6 billion of assets comprising serviced residences and hotels.

Activist investors are pushing for even more consolidation. Quarz Capital Management Ltd. last month released an open letter saying that Sabana Shari’ah Compliant Industrial REIT and ESR-REIT should merge to solve the issue of overlapping investment mandates between the two trusts.

Frasers Property Ltd., backed by Thailand’s TCC Assets Ltd., is the main sponsor for both REITs. TCC Assets is part of TCC Group, one of Thailand’s biggest conglomerates, which was founded by the country’s richest man Charoen Sirivadhanabhakdi.

The deal will allow the enlarged firm to expand its holdings of logistics and industrial properties, including in its existing markets of Germany, the Netherlands and Australia.

“What I would like to emphasize is that industrial remains very much an important market,” Frasers Logistics Chief Executive Officer Robert Wallace said at a media briefing. “We know that market well, we perform well in it.”

Logistics and industrial property will comprise about 60% of the combined firm’s portfolio, followed by commercial, office space and business parks.

Both companies were halted from trading last week pending the announcement. Frasers Commercial Trust’s securities were at S$1.67, having risen 22% this year, while Frasers Logistics units were at S$1.24, up 20% this year.

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.