The proposed merger of OUE Commercial REIT (C-REIT) and OUE Hospitality Trust (H-Trust) is deemed effective, creating an S-REIT with total assets of approximately $6.9b, an SGX filing has revealed.
This follows the approval from unitholders of C-REIT and stapled security holders of H-Trust at their respective meetings and the sanction of the Trust Scheme by Singapore’s High Court in August.
The release states that upon merging the two firms, the portfolio of the enlarged entity will be more diversified with seven properties across the office, retail and hospitality sectors. With reduced concentration risk associated with exposure to any single real estate asset class, the merged REIT is expected to be more resilient.
The release has also stated that the combined entity’s market capitalisation and free float are set to increase to approximately $2.9b and $1.1b, respectively. This makes the enlarged REIT one of the largest S-REITs and is expected to drive higher trading liquidity, which could potentially lead to a positive re-rating and a wider investor base.
The enlarged REIT’s investment mandate has also been expanded to span commercial (office and/or retail), hospitality and integrated developments. Its larger capital base and greater debt headroom will increase its funding capacity to approximately $1b.
According to a SBR report, the scheme consideration of $0.04075 in cash and 1.3583 new C-REIT Units per H-Trust stapled security is expected to be paid on 9 September 2019 and is expected to begin trading on the Singapore Exchange Securities Trading Limited (“SGX-ST”) on the same day. Following that, the H-Trust stapled securities are expected to be delisted on 17 September.
