SINGAPORE (Aug 31): Unitholders of ESR Real Estate Investment Trust (ESR-REIT) on Friday approved a merger with Viva Industrial Trust (VIT), paving the way towards the creation of Singapore's fourth-largest industrial REIT by asset size.

ESR-REIT unitholders holding 94.2% of non-abstaining units voted in favour of the merger at an EGM this morning. Resolutions regarding the proposed issue of new units and a whitewash resolution for the waiver of unitholders’ rights to receive a mandatory general offer from Tong Jinquan, a major unitholder of VIT, also passed with more than 90% approval.

Under the proposed merger, ESR-REIT will pay 96 cents per VIT unit, of which 10% is in cash and 90% in new ESR-REIT units. At least 1.56 billion new units will be issued at 54 cents each, taking the total cost to $936.75 million for ESR-REIT.

According to analysts, a larger REIT with a fully unencumbered portfolio with increased debt tenor provides greater access to pools of capital and at more competitive prices.

A stated strategy of ESR-REIT’s manager is to unlock value where properties have unutilised GFA (Gross Floor Area) to attract high-value tenants.

ESR-REIT’s portfolio has about one million sq ft of unutilised GFA, or around 20% of its portfolio.

Units of ESR-REIT and VIT closed Thursday higher at 52 cents and 91 cents respectively before a trading halt was called for the EGM.

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