ESR REIT & ARA LOGOS Logistics Trust Merger - EGM On 21 Mar 2022
- The EGM for the ESR-REIT (SGX:J91U) - ARA LOGOS Logistics Trust (SGX:K2LU) merger has been set on 21 Mar 2022. Based on the revised offer, ESR-REIT is offering S$0.97 per ARA LOGOS Logistics Trust unit (10% cash and 90% units), which values ARA LOGOS Logistics Trust at 1.45x P/NAV (based on an issue price of S$0.49). Based on current ESR-REIT's share price of S$0.42, ESR-REIT is still valuing ARA LOGOS Logistics Trust at S$0.84, or 1.26x P/NAV, above ARA LOGOS Logistics Trust’s 5-year historical, 1-year historical and current P/NAVs of 1.12x, 1.26x or 1.2x respectively.
- Aside from the usual merger benefits, the proposed ESR-REIT - ARA LOGOS Logistics Trust merger is crucial to avoid conflicts of interest that could derail the growth of both REITs. We see more merits from the REITS merging than on a standalone basis.
- We reiterate ADD calls on both ARA LOGOS Logistics Trust (target price S$0.92) and ESR-REIT (target price S$0.50). We like both REITs on a standalone basis, but we believe further upside could be seen post-merger, driven by better diversification, acceleration of inorganic growth and stronger representation in indexes.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
EING Kar Mei CFA CGS-CIMB Research | LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2022-03-07 2022-03-07
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