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ESR-REIT gives ARA Logos the short end of the stick?

Friday, October 22, 2021

This is going to be a quick blog. 

My interest here is mostly academic. 

I have a big tub of popcorn ready and I hope the movie is a good one.

Talking about movies, recently, I dug out my Harry Potter books from almost 20 years ago and read them again. 

Thanks to the weekly screening of Harry Potter movies on TV recently, I felt like reading the books again.

The books are still as good as ever; they are definitely better than the movies, to be honest.

Really, I do solemnly swear.

Time does fly, doesn't it?

Fellow Harry Potter fans might remember this:


Anyway, isn't this an interesting article in The Business Times?

Feeling of deja vu?


Maybe, just a bit.

Familiar ESR REIT pattern? 


Maybe, just a bit.

Another interesting article in The Business Times.

"Under the deal, for each ALOG unit, ESR-REIT will pay S$0.095 a unit in cash and 1.6765 new ESR-REIT units issued at S$0.51 each, for a total of S$0.95 a unit, the REITs said. 

"Units of ESR-REIT were trading up 2.15 percent at S$0.475 at 11:55 a.m. SGT Monday, while ALOG was at S$0.90, down 3.74 percent." 



Don't accept? 

Alamak, I blur. 

Remember, no one cares more about our money than we do and don't ask barbers if we need a haircut. 

ARA Logos unitholders have to take care of their interest because no one else will do it for them.

Remember this article which was published in The Business Times with regards to ESR REIT's offer for Sabana REIT? 

 "If the proposed merger of Sabana Reit and ESR-Reit last year demonstrated anything, it is that IDs cannot always be relied upon to act in the interest of unitholders." 

IDs cannot be relied on? 

Can rely on brokerages or not? 

Alamak, I really blur lah. 

Sabana REIT was lucky to have activist investors leading the charge.

What about ARA Logos?

I also said something about the proposed merger in the comments section of this blog:

Good luck to unitholders of ARA Logos.

The short end of the stick, anyone?



garudadri said...

Dear AK
I got the same sentiment as you! I hold both but fortunately not a very big holding of ARA
I do have a chunky holding of ESR
There is very little small investors can do in the context of predatory moves like this. We can either sell and encash or grit our teeth and hope for the best
REITS consolidation is like that. Even AIMS AMP is under the radar of a few big fish, including ESR
This plus the repeated dilution of equity base following acquisitions is the main problem with REITs here
Still overall, SG REITS returned more than the rest of the STI excluding banks

AK71 said...

Hi Garudadri.

"Predatory" is a pretty strong word but somehow it feels apt.

Sabana REIT has some pretty vocal activist investors who will, in the process of protecting their interest, help to protect the interest of minority unitholders.

In the case of AIMS APAC REIT, I am not too worried because we have Mr. George Wang. ;)

This proposed merger of ESR-REIT and ARA Logos is good for the former and not so good for the latter.

So, whether the deal is good or not would depend on where investors stand.

Me? I am just a busybody. ;p

Mr. Market is pretty clear minded as unit price of ESR REIT went up while unit price of ARA Logos came down after the proposed merger was announced.

OK. Back to my popcorn. ;p

Tea said...

Hi AK, I have just disposed all my stake in Ara Logos and thankfully can still realised some gains. Now I have to consider if to do the same for other REITs owned by Ara Asset Management (ie ESR) e.g Suntec, Fortune and Prosperity, too bad this episode has created some trust deficit in me ;p

AK71 said...

Hi Tea,

Unfortunate it is.

This article in The Business Times says it all:
ARA Logos minorities may support merger with ESR-Reit, but not because it's a good deal.

"Unitholders of ARA Logos Logistics Trust have no compelling reason to vote in favour of the proposed merger with ESR-Reit."

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