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QCM suggests in its open letter that ESR REIT merge with Sabana REIT in a cash and unit transaction where
0.92 units of ESR REIT and 6.7 cents of cash could be exchanged for 1 unit of Sabana REIT for total value of
54.5 cents or 2.7% discount to Sabana REIT’s book value discount to book value.
For Sabana REIT unitholders, this potential offer provides an attractive takeover premium of ~21% and
addresses the persistent discount at which the unit price trades to NAV. ESR REIT unitholders can potentially
benefit from a ~7% jump in DPU (Dividend yield of ~7.1%) post-merger attributed to the optimisation of the
many levers for Sabana REIT’s portfolio which includes the addition of a retail component at 151 Lorong Chuan
post 2Q2020 and optimisation of management fee payments and occupancy rates.
Sabana REIT closed at 45 cents on Nov 13, and ESR-REIT closed at 52 cents.
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https://www.theedgesingapore.com/capital/activist-investment/hedge-fund-manager-writes-open-letter-esr