Sime Darby launches RTO of Japanese REIT, Saizen

KUALA LUMPUR (Aug 15): Sime Darby Bhd has initiated a reverse takeover (RTO) of Japan’s Saizen Real Estate Investment Trust (REIT) under which it will be injecting several of its industrial properties in Australia into the REIT, in exchange for a a certain amount of units in the REIT and cash.

The conglomerate, via its indirect wholly-owned unit Sime Darby Property Singapore Ltd (Sime Darby Prop Singapore), will also be taking up an 80% stake in Japan Regional Assets Manager Ltd (JRAM), the manager of Saizen REIT.

The injection of the properties and the JRAM acquisition are inter-conditional, said Sime Darby in a bourse filing today.

Its indirect wholly-owned subsidiaries, Hastings Deering (Australia) Ltd (HDAL) and Sime Darby Prop Singapore, have inked a framework agreement today with JRAM, for the sale of certain industrial properties in Australia to Saizen REIT.

The properties will then be master leased to HDAL, and Sime Darby Prop Singapore will be issued new units in Saizen REIT. At the same time, Sime Darby Prop Singapore has inked a conditional share purchase agreement with JRAM for the 80% JRAM stake buy.

Sime Darby said the move is in line with its corporate strategy to develop a REIT platform, in order to generate a resilient and recurring income stream.

“Moving forward, this REIT platform is expected to have greater flexibility in its future fund-raising exercises to build a sizeable international portfolio of assets which Sime Darby will benefit from its direct stake in Saizen REIT,” it said.

“In addition, the proposals would enable Sime Darby to monetise the properties on which HDAL will continue its operations under the master lease, while de-leveraging its balance sheet,” it added.

Sime Darby said this will further allow the group to re-allocate capital and drive continuous improvements in financial and operational efficiency.

Following the signing of the framework agreement, Sime Darby said negotiations will begin for parties to mutually agree on the terms of the definitive transaction agreements to be entered into between the parties by Sept 30, 2016.

The price tag of the assets shall be negotiated and will be based on independent valuations of the properties, Sime Darby added.

As for the JRAM acquisition consideration, it shall be the aggregate of 80% of the net assets of JRAM, plus US$1 million (equivalent to RM4.01 million), and on the basis that the net assets will be no less than S$1 million (equivalent to RM2.98 million) on the date after the extraordinary general meeting of Saizen REIT and no more than S$1.10 million (equivalent to RM3.28 million).

Sime Darby Prop Singapore shall also be entitled to a call option to acquire the remaining 20% equity interest held by JRAM at any time after two years from the completion of the 80% stake buy, at an amount to be determined and mutually agreed upon.

At 3.02pm, Sime Darby shares were trading unchanged at RM7.99, with 5.19 million shares done for a market capitalisation of RM50.6 billion.

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