ESR-Reit, Viva Industrial Trust said to plan merger

[SINGAPORE] ESR-Reit, which is backed by Warburg Pincus's Asian logistics venture, is in talks to merge with Viva Industrial Trust to expand its portfolio of Singapore warehouses and business parks, people with knowledge of the matter said. 

The two Singapore-listed trusts are negotiating the exact terms of a potential combination, according to the people, who asked not to be identified because details are private. A deal could be announced as soon as the next few weeks, one of the people said. 

ESR-Reit and Viva Industrial own real estate valued at a combined S$3 billion at the end of December, according to exchange filings. Chinese property tycoon Tong Jinquan is the biggest investor in both trusts, data compiled by Bloomberg show.

Morgan Stanley analysts said as far back as 2015 that consolidation among Singapore property trusts was "unavoidable and necessary" for developing sufficient scale and liquidity to compete on the global stage. Real estate deals involving Singapore companies have have more than doubled in the past 12 months to $63.3 billion, according to Bloomberg-compiled data.

ESR-Reit had discussed a deal with Sabana Shari'ah Compliant Industrial Reit last year, though exclusive talks between the parties ended in November. ESR-Reit had a market capitalization of S$742 million at the close Thursday in Singapore, while Viva Industrial was valued at S$912 million.

Units of ESR-reit and Viva Industrial were halted from trading in Singapore on Friday afternoon, pending the release of announcements. A representative for ESR-Reit declined to comment, while a representative for Viva Industrial didn't immediately respond to an email and voice mail seeking comment.

BLOOMBERG