Two real estate investment managers tied to Singapore state investor Temasek Holdings Pte. plan to merge in a S$4.2 billion (US$3.1 billion) deal to expand across Asia.
Mapletree Commercial Trust plans to buy Mapletree North Asia Commercial Trust either through cash-and-scrip or a scrip-only consideration, the companies said in a statement to the Singapore exchange on Friday. Both options offer a 7.6 per cent premium to the last trading price on December 27.
The firms, both backed by Temasek-owned Mapletree Investments Pte., said the deal offers a ready launchpad to expand in Asia and to establish footholds in multiple cities swiftly. The new entity, Mapletree Pan Asia Commercial Trust, is poised to become the seventh-largest real estate investment trust in Asia by market capitalization, with assets under management of about S$17.1 billion.
The merger was prompted by a desire to achieve “meaningful long-term expansion” by taking on new opportunities overseas, Sharon Lim, the chief executive officer of the manager of Mapletree Commercial Trust, said at a briefing on Friday.
Investors will be asked to vote on the merger plan by mid-April next year. Mapletree North Asia Commercial will stop trading on the Singapore bourse when the merger is expected to come into effect by the end of May. The merged unit will see just over half of its assets under management located in Singapore with the rest spread across territories including Hong Kong, Japan and mainland China.
The proportion of office and business park assets in the portfolio managed by the merged REITs should grow compared to retail over time, Lim said. Japan and South Korea are favored as a high percentage of workers are returning to the office compared to other markets, Cindy Chow, chief executive officer of the manager of Mapletree North Asia Commercial Trust, said at the briefing.
In China, policy support for the economy means long-term demand exists for targeted industries like the semiconductor and biomedical sectors, said Chow, adding that the REIT would consider “immediate” opportunities from potential stressed assets.
Mapletree Investments, which owns almost 40 per cent each of Mapletree Commercial and Mapletree North Asia Commercial, has elected to receive the scrip-only consideration.
DBS Group Holdings Ltd is advising Mapletree Commercial while HSBC Holdings Plc acted on behalf of Mapletree North Asia Commercial for the deal.