Singapore Tycoon John Lim’s ARA LOGOS, ESR REIT To Merge In $1 Billion Deal Amid…

ARA LOGOS Logistics Trust—backed by tycoon John Lim and billionaire Chew Gek Khim’s Straits Trading—on Friday agreed to merge with ESR REIT in a deal valued at S$1.4 billion ($1 billion) that aims to tap the booming e-commerce demand for warehouses and logistics facilities across the Asia-Pacific.

The transaction—coming on the heels of the merger between ESR REIT’s Hong Kong-listed parent ESR Cayman and ARA LOGOS’ parent ARA Asset Management—further cements the partnership between ARA cofounder John Lim and ESR. Merging the two logistics property-focused REITs would help the combined entity create better value for shareholders, ESR said in reply to queries from Forbes Asia.

The REITs’ parents—ARA Asset and ESR Cayman—separately agreed to merge in August to create the world’s third-largest real estate investment manager with a combined assets under management of $131 billion.   

“With the acquisition of ARA and its captive logistics subsidiary LOGOS, we believe we can further transform the enlarged REIT into the pre-eminent new economy Singapore REIT in the Asia Pacific,” ESR chairman Jeffrey Perlman said in a statement. “This is just one of the several value enhancing steps for the broad group that we intend to take as part of the ARA acquisition.”

The group currently owns $50 billion worth of new economy assets under management across the region, with an additional $10 billion worth of logistics facilities under development.

“We are witnessing a once-in-a-generation  change in real estate driven by the rapid rise of e-commerce, digital transformation,” Perlman said.  “As the largest real estate manager and the largest sponsor of REITs in the Asia Pacific following the planned acquisition of ARA, the enlarges ESR Group is uniquely positioned to capture these mega trends and high conviction secular growth opportunities.”

With the combination of ESR REIT and LOGOS, the Singapore-listed REITs will own a combined portfolio of 87 new economy assets with a total net leasable area of 2.2 million square meters. These include warehouses, logistics facilities, business parks and industrial properties across Singapore and Australia.

Under the deal, ESR REIT will pay LOGOS shareholders S$0.95 cash and 1.68 ESR REIT shares for each LOGOS share. Upon completion of the deal, expected by the first quarter of 2022, ESR REIT will hold a 10.9% stake in the combined entity that will be named ESR-LOGOS REIT.

The merger “enhances our financial capacity and flexibility to pursue larger and more sizable growth opportunities,” Karen Lee, CEO of LOGOS’ manager, said.  

LOGOS is one of the 11 listed and privately held REITs being managed by ARA Asset Management across the Asia Pacific, according to the real estate investment manager’s website. ARA Asset, which is set to merge with ESR Cayman by the end of this year or early 2022 in a deal valued at $5.2 billion, was cofounded by Lim, 65, in 2002 with the backing of Hong Kong’s richest man Li Ka-shing. With a net worth of $950 million, Lim ranked No. 46 in the list of Singapore’s 50 Richest that was published in August.

Straits Trading—controlled by billionaire Chew and her family—is the second largest shareholder of ARA Asset. With a net worth of  $1.65 billion, Chew, 60, ranked No. 27 in the list of Singapore’s 50 Richest.

A longtime business partner of Lim, Chew first invested in ARA Asset in 2013. Earlier this week, Lim’s JL Family Office and Straits Real Estate—the real estate investment arm of Chew’s Straits Trading—committed to invest in Savills Investment Management’s U.K. retail park investment fund that aims to raise 360 million pounds ($494 million) in capital.