July 16, 2020 / 1:26 AM / a month ago

Warburg Pincus-backed Singapore REITs ESR and Sabana propose to merge

SINGAPORE (Reuters) - Singapore’s ESR-REIT (ESRR.SI) has agreed to buy Sabana REIT (SABA.SI) in a deal that will create the city-state’s fifth-largest industrial real estate investment trust by assets, adding to a wave of consolidation in the sector.

Each Sabana unitholder will receive 94 new ESR-REIT units for every 100 Sabana Units held, the companies said in a joint statement on Thursday. The merged entity will have total assets worth about S$4.1 billion ($3 billion), they said.

The two firms had tried to merge in 2017, but talks were called off.

ESR-REIT is backed by Asian logistics developer e-Shang Redwood (ESR) - a venture of private equity firm Warburg Pincus and global investors. e-Shang Redwood also owns shares in Sabana.

Other recent REIT mergers in Singapore include OUE Commercial REIT (OUEC.SI) buying OUE Hospitality Trust.

In 2018, ESR-REIT merged with Viva Industrial Trust. In early 2019, CapitaLand (CATL.SI) agreed to pay S$6 billion to buy logistics and industrial assets from state investor Temasek.

Trading in units of ESR and Sabana were halted on Thursday morning.

Citigroup Global Markets Singapore, Maybank Kim Eng Securities, RHB Securities Singapore, and United Overseas Bank Ltd are the financial advisers to ESR on the deal. Credit Suisse (Singapore) Ltd and The Hongkong and Shanghai Banking Corp Ltd, Singapore, are advising Sabana.

Reporting by Aradhana Aravindan in Singapore; Editing by Stephen Coates

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