• The merger with ARA LOGOS Logistics Trust increases the portfolio’s exposure to its high spec industrial and logistics assets to capture growing demand in this sector. ESR-LOGOS REIT will also be able to leverage on its sponsor ESR group’s established operations platform to tap into overseas markets and strengthen its portfolio quality by addressing its shorter land leases with more freehold or longer land leases properties.
• While there were no financial updates given post-merger, the pro forma credit outlook shows ESR-LOGOS REIT gearing is at 40.8% which is lower than the MAS gearing limit of 50% which gives the REIT sufficient debt headroom of $941.9mn for refinancing.
• A comparable bond for the recent issue ESR-LOGOS REIT 5.5% Perpetual would be Aims APAC REIT 5.375% Perpetual which has a lower yield to worst of 5.18%. The ESR offering also has a slightly longer call date at 9 June 2027 (ESR 5.5% Perp) vs Aims’ 1 September 2026 (Aims APAC 5.375% Perp). High-yield seeking investors may consider the ESR-LOGOS REIT 5.5% Perpetual.

Company Background

Previously known as ESR-REIT, the real estate investment trust company has merged with ARA LOGOS to form ESR-LOGOS Real Estate Investment Trust (“ESR-LOGOS REIT”). It began trading on Singapore Exchange Securities Trading Limited (SGX-ST) on 5^th May 2022. ESR-LOGOS REIT invests in income-producing industrial properties also known as New Economy* properties alongside its business parks, and it has a total of $5.5bn in total assets under management. Its portfolio consist of 83 properties located in Singapore (62 assets) and Australia (21 assets). ESR-LOGOS REIT current market capital stands at 2.669 billion as of 24^rd June 2022.

*New Economy are assets that include warehouses, high specification industrial properties, logistics assets and data centers.

ESR-LOGOS REIT Sponsor

ESR-LOGOS REIT is sponsored by the ESR Group. ESR is a real estate asset manager and a real estate investment manager powered by the New Economy with a total asset under management (AUM) of US$140.2bn. Its development and investment management platforms span across key APAC markets, including China, Japan, South Korea, Australia, Singapore, India, New Zealand and Southeast Asia. ESR is also expanding its presence in Europe and the US.

ESR-LOGOS REIT Manager

ESR-LOGOS Fund Management (S) Limited (previously known as ESR Fund management (S) limited) will continue to be the manager of the ESR-LOGOS REIT. ESR-LOGOS Fund Management (S) Limited is 67.3% own by ESR group, 25% by Shanghai Summit Pte Ltd and 7.7% Mitsui & Co Ltd.

Positives after the merger with ARA LOGOS

+Tapping into overseas market through the leverage of the sponsor. ESR-LOGOS REIT will be able to leverage on its sponsor’s established operations platform and local country resources to tap into overseas markets. This enables the firm to address its structural short land leases in Singapore’s industrial property sector through exposure to more freehold and longer land lease tenure assets which would strengthen portfolio quality.