OCBC recommends ESR-REIT shareholders to approve ARA merger

The bank said the merger is crucial in the REIT sector.

In a report, OCBC Investment Research suggested that ESR-REIT shareholders accept the merger with ARA LOGOS Logistics Trust.

The two trusts jointly announced their proposed merger on 15 October. It will be named ESR-LOGOS REIT. ESR-REIT will acquire all units of ARA LOGOS via a combination of cash and new units in ESR-REIT for a total consideration of around $1.4b based on the scheme consideration of $0.95 for each unit.

OCBC said they are largely positive on this proposed merger, given the importance of scale in the REIT sector with potentially better trading liquidity, lower cost of capital, and greater feasibility to acquire larger properties to drive inorganic growth. 

The proposed merger is conditional upon the completion of ESR Cayman and ARA Asset Management's merger and requires both ESR-REIT and ARA LOGOS' unitholders' approvals, which will be held in early January 2022.