OUE C-Reit, H-Trust merger takes effect; creates enlarged S$6.9b Reit

Singapore

THE trust scheme of arrangement for the merger of OUE Commercial Real Estate Investment Trust (C-Reit) and OUE Hospitality Trust (H-Trust) became effective and binding on Wednesday morning.

This follows the approval from holders of both trusts on Aug 14 as well as the High Court's sanction of the trust scheme last month.

H-Trust stapled securityholders will receive payment of the scheme consideration - 4.075 Singapore cents in cash and 1.3583 new C-Reit units per stapled security - by Sept 9. After that, the stapled securities will be delisted on Sept 17. Their last day of trading was on Aug 30.

The merger creates one of the largest diversified Singapore real estate investment trusts (S-Reits), with total assets of about S$6.9 billion.

Post-merger, the enlarged portfolio will comprise seven properties across the office, retail and hospitality sectors. These are commercial properties OUE Bayfront, One Raffles Place, OUE Downtown Office and Mandarin Gallery in Singapore, as well as Lippo Plaza in Shanghai, and two hotels - Mandarin Orchard Singapore and Crowne Plaza Changi Airport.

The investment mandate of the enlarged Reit has also been broadened, to span commercial, hospitality and integrated developments. This is to give the manager greater flexibility to grow the enlarged Reit's portfolio.

After the merger completion, the market capitalisation and free float of the enlarged Reit will increase significantly to around S$2.9 billion and S$1.1 billion, respectively.

This is expected to drive higher trading liquidity, which could potentially lead to a positive rerating and a wider investor base, the managers of both trusts said. The enlarged entity's larger capital base and greater debt headroom will also increase its funding capacity to around S$1 billion, allowing it to undertake larger transactions and asset enhancement initiatives with greater ease and speed.

Units of OUE C-Reit closed flat at S$0.52 on Wednesday.