ESR-REIT proposes 10 to 1 unit consolidation to reduce trading fluctuations

Since 1 January 2022, ESR-REIT has traded in the range of $0.245 to $0.485.

ESR-REIT proposed a unit consolidation to stabilise trading by reducing price fluctuations and excessive market volatility.

ESR-REIT Management (S) Limited, the manager of ESR-REIT said it wants to consolidate every 10 existing units in ESRREIT held by unitholders of ESR-REIT into one.

The number of consolidated units to which unitholders will be entitled, based on their holdings of existing units as at the record date, will be rounded up to the nearest whole consolidated unit and any fractions of Consolidated Units arising from the Proposed Unit Consolidation will be rounded up.

According to ESR-REIT’s manager, the proposed consolidation will reduce the percentage change fluctuation in trading, reduce excessive volatility in its market capitalisation and allow for unit price movements that are more consistent with general market movements in terms of percentage changes.

Since 1 January 2022, ESR-REIT’s unit price has ranged between $0.245 and $0.485. At a typical trading price of $0.260, the SGX’s minimum bid-ask spread of $0.005 for units below $1.00 results in a 1.9% price change. After the proposed 10-to-1 unit consolidation, the theoretical unit price would rise to $2.60, where the bid-ask spread would be $0.01. This reduces the percentage change in trading price to 0.4%, making price movements more stable.

The manager expects the smaller percentage change impact from unit trading price fluctuations to reduce volatility in its trading, and further facilitate tighter price discount ranges during corporate actions, such as equity fundraising exercises, which will provide long-term benefits to all Unitholders.

It also expects an in increased market interest and activity in the consolidated units and generally enhances the attractiveness of the consolidated units to investors, including institutional investors.

The manager will be seeking the approval of Unitholders by way of an ordinary resolution at an
extraordinary general meeting to be convened.