OUE Commercial REIT (C-REIT) and OUE Hospitality Trust (H-Trust) announced a mega merger that involves C-REIT absorbing H-Trust. Given OUE’s dodgy history as a REIT sponsor, I was interested to see if this merger would be beneficial to C-REIT and H-Trust Unitholders. Here are my findings.

Merger Summary

Merger announcement information can be found here (C-REIT) and here (H-Trust)

Consideration

The merger will be effected via scheme of arrangement, with C-REIT issuing 1.3583 units and $0.04075 in cash per H-Trust stapled security.

Using C-REIT’s latest price of 52 cents, this translates to a consideration of approximately 75 cents per H-Trust unit. This represents a slight premium of 1.5 cents or 2% over H-Trust’s latest unit price of 73.5 cents.

Also, do note that the illustrative consideration mentioned within the SGX announcement uses a higher C-REIT per unit price of 57 cents.

Financing

The cash consideration will be funded by