Swiss group Volare makes partial offer for Sabana Reit at 46.5 cents per unit

SINGAPORE – Sabana Industrial Reit’s substantial shareholder Volare Group last Friday launched a voluntary conditional offer to acquire an additional 10 per cent of Sabana units at 46.5 cents per unit.

The offer price represents a premium of 9.4 per cent over the volume-weighted average price last Friday. It is also 8.6 per cent, 9.7 per cent and 6.9 per cent, respectively, higher than the volume-weighted average price during the one-, two- and six-month periods preceding last Friday.

Volare, which holds 5.4 per cent of issued units in the Singapore-listed real estate investment trust, is a Switzerland-incorporated entity with various businesses. Its subsidiary, Oel-Pool, is one of Switzerland’s leading suppliers of fossil fuels and operates more than 700 petrol stations together with its unit Moveri.

Volare’s other business lines include vehicle care, wood production and trade, construction services and investments in real estate. The group said it is launching the partial offer to diversify its business from fossil fuels and build up its real estate portfolio.

Sabana’s units are thinly traded, Volare noted, which prevents it from acquiring units on the open market efficiently, and prevents larger unit holders from selling. It believes the partial offer presents a good opportunity for unit holders to monetise their holdings.

Activist investor Quarz Capital, which had slammed a controversial potential merger between Sabana and larger rival ESR-Reit in 2020, called Volare’s offer attractive.

“The offer is at an attractive premium of over 34 per cent over the low-ball implied-merger offer of $0.348 recommended by the Reit manager in December 2020 (one Sabana unit for 0.94 times ESR-Reit unit),” said Quarz Capital Asia’s head of research Havard Chi.

“Unit holders get to eat twice – pocket the coming dividend and also tender at the attractive offer.”

Mr Chi said Sabana faces a number of serious challenges. Its occupancy rate has remained below that of its peers and the national average, and its unit price consistently trades at a large discount to its net asset value.

“Given the attractive offer, we believe it might make sense that unit holders tender part of their units at a good price to a strong independent unit holder, and also retain some to vote against the manager,” he said.

Sabana units closed on Friday at 42.5 cents, up 0.5 cent, or 1.19 per cent.

THE BUSINESS TIMES