Forensic Analyst

Jason Yap, CFA

Forensic Accounting

Sabana Industrial REIT / Forensic Accounting

<ul>
<li>In December 2020, Sabana's unitholders voted down a proposed merger with ESR-REIT</li>
<li>While Sabana's unitholders were ostensibly holding out for more favourable transaction terms, this was not forthcoming and transaction ultimately fell through</li>
<li>In this Insight, we look into Sabana a year on and discuss whether its unitholders have been left to rue the failed transaction and this was but a pyrrhic victory</li>
</ul>


In December 2020, Sabana's unitholders voted down a proposed merger with ESR-REIT
While Sabana's unitholders were ostensibly holding out for more favourable transaction terms, this was not forthcoming and transaction ultimately fell through
In this Insight, we look into Sabana a year on and discuss whether its unitholders have been left to rue the failed transaction and this was but a pyrrhic victory


One Year After Failed Merger, A Pyrrhic Victory for Sabana's Unitholders?

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Digital Core REIT / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/digital-core-reit" target="_blank" data-smartkarma-citation="entities:35145:1" rel="noopener">Digital Core REIT (DCREIT SP)</a> is the exclusive S-REIT sponsored by <a href="https://www.smartkarma.com/entities/digital-realty-trust-inc" target="_blank" data-smartkarma-citation="entities:13149:1" rel="noopener">Digital Realty Trust (DLR US)</a>. It is seeking to raise US$600 million at US$0.88 per unit. </li>
<li>In <a href="https://www.smartkarma.com/insights/digital-core-reit-ipo-reaching-for-the-clouds" target="_blank" data-smartkarma-citation="insights:61737" rel="noopener">Digital Core REIT IPO: Reaching for the Clouds</a>, we outlined its attractive value proposition.    </li>
<li>Cornerstones such as Blackrock, Fidelity, JP Morgan AM account for 61% of the offer. Our valuation analysis suggests that the IPO price of $0.88 per unit is reasonable.</li>
</ul>



Digital Core REIT (DCREIT SP) is the exclusive S-REIT sponsored by Digital Realty Trust (DLR US). It is seeking to raise US$600 million at US$0.88 per unit. 
In Digital Core REIT IPO: Reaching for the Clouds, we outlined its attractive value proposition.    
Cornerstones such as Blackrock, Fidelity, JP Morgan AM account for 61% of the offer. Our valuation analysis suggests that the IPO price of $0.88 per unit is reasonable.


Digital Core REIT IPO: Valuation Insights

Daiwa House Logistics Trust / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/daiwa-house-logistics-trust" target="_blank" data-smartkarma-citation="entities:35020:1" rel="noopener">Daiwa House Logistics Trust (DHLT SP)</a> has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. </li>
<li>In <a href="https://www.smartkarma.com/insights/daiwa-house-logistics-trust-ipo-the-flow-of-things" target="_blank" data-smartkarma-citation="insights:60978" rel="noopener">Daiwa House Logistics Trust IPO: The Flow of Things</a>, we outlined its attractive value proposition.  </li>
<li>Our valuation analysis suggests that the IPO price of S$0.80 per unit is reasonable.</li>
</ul>



Daiwa House Logistics Trust (DHLT SP) has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. 
In Daiwa House Logistics Trust IPO: The Flow of Things, we outlined its attractive value proposition.  
Our valuation analysis suggests that the IPO price of S$0.80 per unit is reasonable.


Daiwa House Logistics Trust IPO: Valuation Insights

<ul>
<li>
<a href="https://www.smartkarma.com/entities/daiwa-house-logistics-trust" target="_blank" data-smartkarma-citation="entities:35020:1" rel="noopener">Daiwa House Logistics Trust (DHLT SP)</a> has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. </li>
<li>DHLT offers an attractive value proposition consisting of a blue-chip tenant base, a staggered lease expiry profile, manageable tenant concentration risk, a growth pipeline and low capex.</li>
<li>DHLT offers exposure to the only Japan pure-play REIT listed in Singapore.</li>
</ul>



Daiwa House Logistics Trust (DHLT SP) has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. 
DHLT offers an attractive value proposition consisting of a blue-chip tenant base, a staggered lease expiry profile, manageable tenant concentration risk, a growth pipeline and low capex.
DHLT offers exposure to the only Japan pure-play REIT listed in Singapore.


Daiwa House Logistics Trust IPO: The Flow of Things

Event-Driven

<p><a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934:1" rel="noopener">ESR-REIT (EREIT SP)</a> announced the proposed merger with <a href="https://www.smartkarma.com/entities/ara-logos-logistics-trust" target="_blank" data-smartkarma-citation="entities:937:1" rel="noopener">ARA LOGOS (ALLT SP)</a> by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). </p><p>The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by <a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.</p><p>A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). </p><div class="content-highlight"><p>As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.</p></div>

ESR-REIT (EREIT SP) announced the proposed merger with ARA LOGOS (ALLT SP) by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by ESR Cayman (1821 HK) for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.

ESR-REIT’s Proposed Merger with ARA LOGOS

Singapore

Sabana Industrial Real Estate Investment Trust is a real estate investment trust. The Trust focuses on investments in income-producing real estate used for industrial purposes in Asia, as well as real estate-related assets, in line with Sabana investment principles.

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Sabana Industrial REIT (SSREIT SP)

One Year After Failed Merger, A Pyrrhic Victory for Sabana's Unitholders?

In Dec 2020, Sabana's unitholders voted down a proposed merger with ESR-REIT. A year on, we look into Sabana and discuss whether its unitholders...

Jason Yap, CFA

Digital Core REIT IPO: Valuation Insights

Digital Core REIT is seeking to raise US$600 million at US$0.88 per unit. Our valuation analysis suggests that the IPO price of $0.88 per unit is...

Arun George

Daiwa House Logistics Trust IPO: Valuation Insights

Our valuation analysis suggests that the IPO price of S$0.80 per unit is reasonable. Bookbuilding will end on 18 Nov, with an expected listing date...

Arun George

Daiwa House Logistics Trust IPO: The Flow of Things

DHLT has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million). Overall, we believe that DHLT offers an attractive value...

Arun George

ESR-REIT’s Proposed Merger with ARA LOGOS

A key issue is on pricing particularly the EREIT issue price of S$0.510, based on EREIT’s 52-week high. While short-term pricing concerns will...

Arun George

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