Sime’s Saizen REIT buy is back on track

KUALA LUMPUR (Oct 11):  Sime Darby Bhd’s plans to acquire a majority stake in Singapore-based Saizen Real Estate Investment Trust (REIT) through a reverse takeover is back on track.

The conglomerate yesterday said it has entered into an implementation agreement for the disposal of its properties in Australia and the acquisition of a majority stake in Saizen REIT.

This comes just a week after Sime Darby said that its framework agreement signed with Japan Residential Assets Manager Ltd (JRAM), manager of Saizen REIT, on Aug 15 to inject Sime Darby’s Australian industrial property into the trust in exchange for more than a 30% stake in the enlarged capital of Saizen REIT, has lapsed.

In its filing yesterday, Sime Darby said the implementation agreement was signed between Sime Darby Eastern Investments Pte Ltd, Sime Darby Property Singapore Ltd (SDPSL) — both indirect wholly-owned subsidiaries of Sime Darby — JRAM and Perpetual Corporate Trust Ltd, the trustee of Sime REIT Australia.

The agreement includes the proposal to acquire 80% in JRAM and the disposal of 20 industrial properties in Queensland and the Northern Territory, Australia, for a total consideration of A$355.8 million (RM1.12 billion).

Out of the total consideration, A$282.58 million will be satisfied by a combination of promissory notes and cash proceeds from the placement of the new units to underwriters and investors, while the balance will be funded by bank borrowings.

Following that, SDPSL will subscribe for new units in Saizen REIT at an issue price of S$0.03604 (11 sen) and issue promissory notes for the new units, and is expected to hold no less than 25% of the enlarged Saizen REIT after the completion of the placement exercise.

“The proposals will enable Sime Darby to monetise the properties, while deleveraging its balance sheet. This will further allow Sime Darby to reallocate capital and drive continuous improvements in financial and operational efficiency,” said Sime Darby.

Sime Darby shares fell 13 sen or 1.65% to RM7.77 yesterday, which translates into a market capitalisation of RM49.16 billion.

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This article first appeared in The Edge Financial Daily, on Oct 11, 2016. Subscribe to The Edge Financial Daily here.