ESR REIT : Proposed Merger Of Esr-REIT And Ara Logos Logistics Trust - Revision Of Scheme Consideration

ESR-REIT	ARA LOGOS Logistics Trust
(a real estate investment trust constituted on 31 March 2006	(a real estate investment trust constituted on 11 February 2010
under the laws of the Republic of Singapore)	under the laws of the Republic of Singapore)
Managed by	Managed by
ESR Funds Management (S) Limited	ARA LOGOS Logistics Trust Management Limited
(Company Registration No: 200512804G)	(Company Registration No: 200919331H)

JOINT ANNOUNCEMENT

PROPOSED MERGER OF ESR-REIT AND ARA LOGOS LOGISTICS TRUST

BY WAY OF A TRUST SCHEME OF ARRANGEMENT

• • REVISION OF SCHEME CONSIDERATION
• ESR-REITMANAGER AND ALOG MANAGER ENTERED INTO AN AMENDED AND RESTATED IMPLEMENTATION AGREEMENT IN RESPECT OF THE MERGER AND THE SCHEME
• HIGHER REVISED SCHEME CONSIDERATION1 COMPRISING S$0.097 IN CASH AND 1.7729 NEW ESR-REIT UNITS FOR EACH ALOG UNIT
• SUBJECT TO THE ALOG IFA OPINION AND IN THE ABSENCE OF A FURTHER SUPERIOR COMPETING OFFER, PRELIMINARY RECOMMENDATION BY THE ALOG INDEPENDENT DIRECTORS IS FOR ALOG UNITHOLDERS TO VOTE IN FAVOUR OF THE MERGER AND THE SCHEME
• EGM AND SCHEME MEETING DEFERRED TO A FUTURE DATE TO BE ANNOUNCED

1. INTRODUCTION

1.1 The Merger and the Scheme. The respective boards of directors of ESR Funds Management

(S) Limited, as manager of ESR-REIT (the "ESR-REITManager") and ARA LOGOS Logistics Trust Management Limited, as manager of ARA LOGOS Logistics Trust ("ALOG", and the manager of ALOG, the "ALOG Manager") refer to:

1. the joint announcement dated 15 October 2021 issued by the ESR-REIT Manager and the ALOG Manager, in relation to the proposed merger (the "Merger") of ESR-REIT and ALOG, to be effected through the acquisition by RBC Investor Services Trust Singapore Limited (in its capacity as trustee of ESR-REIT) (the "ESR-REITTrustee")

1Implied gross exchange ratio of 1.970x in Revised Scheme Consideration, compared to implied gross exchange ratio of 1.863x in Scheme Consideration as at 15 October 2021.

of all the units of ALOG held by the unitholders of ALOG (the "ALOG Unitholders"), in exchange for a combination of cash and units in ESR-REIT, by way of a trust scheme of arrangement (the "Scheme") in compliance with the Singapore Code on Take-overs and Mergers (the "Code");

1. the circular (the "Circular") dated 5 to the unitholders of ESR-REIT (the " and

January 2022 issued by the ESR-REIT Manager ESR-REITUnitholders") in relation to the Merger;

1. the scheme document (the "Scheme Document") dated 5 January 2022 issued by the ALOG Manager to ALOG Unitholders in relation to the proposed amendments to the deed of trust constituting ALOG and the Merger.

Unless otherwise defined, all capitalised terms in this announcement (this "Announcement") shall bear the same meaning as set out in the Circular and/or the Scheme Document.

1.2 Amended and Restated Implementation Agreement. In connection with the Merger, the ESR-REITManager, the ESR-REITTrustee, the ALOG Manager and the ALOG Trustee have today entered into a supplemental letter amending and restating the Implementation Agreement (the "Amended and Restated Implementation Agreement") setting out the amended terms on which the Scheme will be implemented. Further details of the amended terms of the Scheme are set out below.

2. REVISED SCHEME CONSIDERATION

Pursuant to the Amended and Restated Implementation Agreement, each of the ESR-REIT Trustee and the ESR-REIT Manager will, following the Scheme becoming effective in accordance with its terms, pay or procure the payment of S$0.970 (the "Revised Scheme Consideration") for each ALOG Unit held by each of the ALOG Unitholders as at the Books Closure Date, which shall be satisfied by:

1. firstly, the payment of cash consideration, which will be revised from a sum of S$0.095 in cash to S$0.097 in cash (the "Revised Cash Consideration"). The aggregate Revised Cash Consideration to be paid to each ALOG Unitholder shall be rounded to the nearest S$0.01; and
2. secondly, the allotment and issuance of new ESR-REIT Units for each ALOG Unit, which will be revised from 1.6765 new ESR-REIT Units to 1.7729 new ESR-REIT Units (the "Consideration Units"), such Consideration Units to be credited as fully paid. The Consideration Units will be issued at the issue price of S$0.4924 per Consideration Unit. No fractions of a Consideration Unit shall be allotted and issued to any ALOG Unitholder and fractional entitlements shall be disregarded in the calculation of the Consideration Units to be allotted and issued to any ALOG Unitholder pursuant to the Scheme.

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The Consideration Units shall:

1. when issued, be duly authorised, validly issued and credited as fully paid-up and shall rank pari passu in all respects with the existing ESR-REIT Units as at the date of their issue (and not as at the Joint Announcement Date or the date of this Announcement)2; and
2. be issued free from all and any Encumbrances and restrictions or transfers and no person has or shall have any rights of pre-emption over the Consideration Units.

In arriving at the Revised Scheme Consideration, the ESR-REIT Manager had taken into account the following factors including, inter alia:

1. the commercial rationale of the Merger (as set out in section 3 of this Announcement, the Scheme Document and the Joint Announcement);
2. strong conviction that the Merger is the best way forward for both ALOG and ESR-REIT as it would combine two best-in-class platforms to form a leading New Economy APAC S-REIT;
3. the quality of ALOG's portfolio, the robustness and strong demand of the overall Australian market, in particular the logistics sector, which continues to see strong demand growth and cap rate compression;
4. the historical relative trading prices of ALOG Units and ESR-REIT Units;
5. balancing the respective financial impact to ALOG Unitholders and ESR-REIT Unitholders from a DPU and NAV per unit accretion and dilution perspective;
6. the gearing of the combined REIT post-Merger; and
7. other factors previously set out in the Joint Announcement and Scheme Document.

Illustration of the Revised Scheme Consideration

By way of illustration, if the Scheme becomes effective in accordance with its terms, an ALOG Unitholder will receive S$97.00 in cash and 1,772 Consideration Units for every 1,000 ALOG Units held by it as at the Books Closure Date.

2For the avoidance of doubt, the Consideration Units shall be issued with all rights, benefits and entitlements attaching on and from the date of their issue (and not as at the Joint Announcement Date or the date of this Announcement), including the right to receive and retain all rights and other distributions (if any) declared or to be declared by the ESR- REIT Manager on or after the date of their issue.

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The Parties shall be entitled to announce, declare, pay or make the ALOG Permitted Distributions and ESR-REIT Permitted Distributions (as the case may be) without any adjustment to the Revised Scheme Consideration.

The ALOG Unitholders shall have the right to receive and retain the ALOG Permitted Distributions in addition tothe Revised Scheme Consideration. As part of the ALOG Permitted Distributions, the ALOG Manager has on 26 November 2021 paid the distribution of 1.329 cents per ALOG Unit in respect of the period from 1 July 2021 to 30 September 2021 to ALOG Unitholders.

The ESR-REIT Manager reserves the right to adjust the Revised Scheme Consideration by reducing the cash component of the Revised Scheme Consideration, the unit component of the Revised Scheme Consideration or by any combination of such cash and unit components of the Revised Scheme Consideration, if and to the extent any distribution in excess of the ALOG Permitted Distributions is announced, declared, made or paid by the ALOG Manager on or after 15 October 2021, being the date of the Joint Announcement.

3. ALOG MANAGER'S RATIONALE FOR THE MERGER

In addition to the merits of the Merger as previously set out in the Joint Announcement and the Scheme Document, the ALOG Manager wishes to elaborate on the below, which should be read in conjunction with the previous announcements.

3.1 Financial Benchmarking of the Illustrative Value of the Revised Scheme Consideration. The illustrative value of the Revised Scheme Consideration of S$0.933 represents an improvement of 5.3% as compared to the illustrative value of the original Scheme Consideration on a like-for-likebasis. 3 This was computed by computing the illustrative value of the Revised Scheme Consideration and the original Scheme Consideration based on the one (1)-monthVWAP of ESR-REITUnits prior to the announcement of the Merger on 15 October 2021 for a like-for-likecomparison.

3References to "illustrative value" of the original Scheme Consideration or Revised Scheme Consideration, as the case may be, in this Announcement shall mean the aggregate sum of (i) the implied value of the Consideration Units computed based on the one-month VWAP of ESR-REIT Units prior to the Joint Announcement Date and (ii) the cash consideration payable.

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	(A)	(B)	(C)	(B+C)
		Illustrative
		Value of
		Consideration
		Units based on		Illustrative
	Number of	one (1) month		Value(2)of
	Consideration	VWAP of ESR-	Cash	Scheme
	Units	REIT Units(1)	Consideration	Consideration
Original	1.6765	S$0.791	S$0.095	S$0.886
Scheme
Consideration
Revised	1.7729	S$0.836	S$0.097	S$0.933
Scheme
Consideration

Notes:

1. The one (1)-month VWAP of ESR-REIT Units prior to the Joint Announcement Date is S$0.4716 per ESR- REIT Unit. The one-month VWAP of the ESR REIT Units has been used as the basis for the illustrative value of the Consideration Units so as to provide Unitholders with a benchmark price which is reflective of the average traded price of the Consideration Units for the one (1)-month period prior to the Joint Announcement Date, rather than a spot price.
2. References to the "illustrative value" of the original Scheme Consideration or Revised Scheme Consideration, as the case may be, in this Announcement shall mean the aggregate sum of the implied value of the Consideration Units computed based on the one-month VWAP of ESR-REIT Units prior to the Joint Announcement Date (Column (B)) and the cash consideration (Column (C)) payable.

The illustrative value of the Revised Scheme Consideration, being S$0.933 per ALOG Unit, represents a premia of 0.5 per cent., 2.2 per cent., 6.5 per cent., 19.6 per cent. and 31.2 per cent. over the one (1)-month VWAP (S$0.928), three (3)-month VWAP (S$0.913), six (6)-month VWAP (S$0.876), 12-month VWAP (S$0.780) and 24-month VWAP (S$0.711) per ALOG Unit, and 37.6 per cent. over the NAV per ALOG Unit as at 30 September 2021 (S$0.678). The price- to-NAV multiple4 of the ALOG Units based on the illustrative value of the Revised Scheme Consideration is 1.4x.

Further, based on the Revised Scheme Consideration and the bases and assumptions set out in Schedule 1, the historical pro forma DPU accretion to ALOG Unitholders increases from 8.2% to 12.8%5 and the historical pro forma NAV per unit accretion to ALOG Unitholders increases from 2.2% to 5.3%6. For the avoidance of doubt, the historical pro formas are for illustrative purposes only and are not intended to be nor shall they constitute projections or forecasts.

3.2 This is a merger, not a complete sell-out of ALOG and/or its underlying assets. The ALOG Manager would like to emphasise that this proposed transaction is intended as a merger and

1. Based on the NAV per ALOG Unit of S$0.678 as of 30 September 2021.
2. Refer to Schedule 1 of this Announcement for more details on the pro-forma adjustments

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