IT IS not every day that an underdog in the Singapore Reit (S-Reit) sector with one of the smallest market capitalisations can vault onto the road to index inclusion with the help of a sister Reit under the same sponsor.

For unitholders of Sabana Reit, who just three years ago had tried to oust the manager and even liquidate the Reit, complaining of severe undervaluation and poor acquisitions funded by a dilutive rights issue, this is quite the fairytale ending.

While the proposed merger between ESR-Reit and Sabana Reit announced last Thursday is a win-win for both parties, there is probably more in the deal for unitholders of Sabana Reit. As a seeming testament to this, units of Sabana Reit have risen 5.6 per cent since last Thursday, compared to a 1.3 per cent increase for ESR-Reit units.