Frasers Logistics & Industrial Trust has agreed to buy Frasers Commercial Trust in a $1.54 billion deal, giving it greater ammunition to make acquisitions amid a spate of consolidation moves among Singapore's real estate investment trusts (Reits).
Combined, the group will have about $5.7 billion worth of assets from 98 properties totalling 2.6 million sq m of space across Singapore, Australia and Europe, including warehouses, offices and business parks.
Apart from Frasers Commercial's two properties in Singapore, China Square Central and Alexandra Technopark, the rest are overseas.
The merged Reit's market value will almost double to about $4.2 billion, propelling it to No. 9 among Singapore's top 10 Reits, according to a statement yesterday.
The merger is at 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 struck a $6 billion deal with Temasek to combine Ascendas and Singbridge. 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 $7.6 billion worth of assets comprising serviced residences and hotels.
Frasers Property, backed by Thailand's TCC Assets, 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.
"What I would like to emphasise is that industrial remains very much an important market," Frasers Logistics chief executive officer Robert Wallace said at a media briefing yesterday.
"We know that market well; we perform well in it."
Logistics and industrial property will comprise about 60 per cent of the combined firm's portfolio, followed by commercial, office space and business parks.
Frasers Logistics, the bigger partner, has 92 properties valued at $3.3 billion: 62 in Australia, 25 in Germany and five in the Netherlands. Frasers Commercial will bring its six properties worth $2.2 billion, including China Square Central and Alexandra Techno-park in Singapore.
The enlarged Reit plans to buy the remaining half of Farnborough Business Park in the UK, with Frasers Commercial already owning 50 per cent, for £90.1 million (S$159.4 million) from Frasers Property.
If the proposed merger, which is subject to approval from investors and the High Court, goes through, Frasers Commercial will be delisted from the Singapore Exchange.
• With additional information from The Straits Times