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Frasers’ Singapore REITs Agree to Merge in $1.1 Billion Tie-Up

By Faris Mokhtar

Singapore — Frasers Logistics & Industrial Trust has agreed to buy Frasers Commercial Trust in a 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.

(Source: Bloomberg)

The merger is at the least the fourth such 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 rates both REITs a buy.

The 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.

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.

© 2019 Bloomberg L.P.