In the cold light of day, ARA LOGOS Logistics Trust (ALOG) unitholders are not quite overjoyed at the terms of the ESR-REIT offer for its units despite being valued at its highest level this year.

ALOG unitholders are being paid 95 cents, which is the highest price achieved by the REIT in the past 12 months, in a mixture of mainly ESR-REIT units and 9.5 cents in cash. As the ESR-REIT units are priced at 51 cents, ALOG unitholders will receive 1.6765 new ESR-REIT units and 9.5 cents. Since the price is fixed, the two REITs are likely to trade in lockstep. Meanwhile, ESR-REITs unit prices have strengthened.

The merger is 8.2% accretive to ALOG’s DPU based on a pro forma basis for FY2020 and 2.2% accretive to its NAV. For ESR-REIT, the transaction is 5.8% accretive to its FY2020 DPU.

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