Sime Darby to inject Aussie properties into Saizen Reit in reverse takeover
This will provide opportunity for Reit to venture into new business; Reit's market cap expected to be at least S$300m on completion of deal
Singapore
MALAYSIAN conglomerate Sime Darby Berhad is injecting some Australian industrial properties into Saizen Reit in return for a majority stake in the Reit through a reverse takeover. It will also be taking up an 80 per cent stake in the Reit manager.
A framework agreement was inked on Aug 15 between Saizen Reit and two of Sime Darby's subsidiaries, Saizen disclosed on Monday. Discussions on the terms of the definitive agreement have begun.
Saizen Reit's market capitalisation is expected to be at least S$300 million, if the deal with Sime Darby materialises.
The news on Monday sent Saizen Reit units leaping 23.5 per cent to 12.1 Singapore cents on Monday after the morning trading halt was lifted after lunch. Bursa-listed Sime Darby was up 1.3 per cent at RM8.09 by market close.
This latest proposed acquisition by Saizen Reit marks a change of investment strategy from a pure focus on Japanese residential properties before it divested its entire portfolio in March.
The deal's completion is subject to mutual due diligence and approvals from regulators and shareholders, and a draw-down on an acquisition loan, among others. The framework agreement will lapse if definitive agreements are not reached by the long-stop date of Sept 30.
"The board believes that the proposed properties acquisition will provide an opportunity for Saizen Reit to venture into a new business area under the stewardship of an established sponsor," Saizen Reit said. "This is expected to create value for and enhance the long-term interests of Saizen Reit and its unitholders, after having realised value from the disposal."
Saizen Reit has become a cash trust since it sold its entire portfolio of Japanese regional residential properties to Triangle TMK in March for 44.66 billion yen (S$517.3 million). Most of the proceeds from the sale were paid out to unitholders via a special distribution.
Under the framework agreement inked by Sime Darby's subsidiaries and Saizen Reit, Saizen Reit will acquire industrial properties in Australia from Hastings Deering (Australia) Limited (HDAL); these properties would be master leased to HDAL or its nominee.
The Reit manager will issue new units in Saizen Reit to Sime Darby Property Singapore Limited (SDPSL), which will result in SDPSL owning more than 30 per cent of Saizen Reit on a fully diluted basis. SDPSL plans to seek a whitewash waiver to avoid having to make a general offer for the Reit.
Saizen Reit's sponsor Japan Regional Assets Manager Limited also plans to sell an 80 per cent stake in the Reit manager to SDPSL.
The Reit manager said that it will have a change in board composition and management team upon receiving unitholders' approval for the proposed acquisition.
The Reit's total cash at liquidation as at July 15 stood at 9.87 Singapore cents per unit, which will be paid to existing unitholders prior to the issuance of new Saizen Reit units for the acquisition.
After the liquidation distribution, part of the consideration for the Australian properties will be fulfilled by issuing new Saizen Reit units at 3.484 cents per unit. The balance payment will be financed by bank financing, which SDPSL will arrange. The properties will be independently valued.
The proposed sale of properties to Saizen Reit by Sime Darby is part of the latter's asset monetisation exercise to ease its gearing levels amid challenging times.
Its president and group chief executive Mohd Bakke Salleh had said that the monetisation programme would include commercial and industrial properties and that the company had identified 13 assets in Australia and three in Singapore.
Private equity giant Blackstone was earlier said to be in talks to acquire as many as five industrial buildings in Australia and agreed to take a majority interest in the three Singapore properties.
