FET said in a statement that the merger with FST would provide a number of benefits, including increasing its market capitalisation, and would enhance liquidity.
“[It will increase] FET’s portfolio of early learning properties from 354 to 401 and the combined value from $471 million to $545 million,” the statement said.
“[Also, it will increase] the 2014/2015 financial year forecast second-half distribution by 0.1 cents per unit to 6.45 cents per unit (accretion of 1.6 per cent) resulting in an annual forecast of 12.8 cents per unit.
“The Board of FIML believes that the Proposal is consistent with FET’s overall strategy of acquiring portfolios and individual assets that add to earnings, portfolio quality and both tenant and geographic diversification,” FET said.
Folkestone Limited managing director Greg Paramor said the move will deliver “significant value” to “both sets of unitholders”.
“Folkestone remains committed to the real estate social infrastructure sector and believes that the ongoing provision of accommodation for the early learning sector provides a key benefit to the community,” Mr Paramor said.
“Since acquiring the management rights to the Austock Property Funds Management platform including FET and FST in 2012, Folkestone has worked hard to deliver on each Trust’s objectives and to manage each Trust in the best interest of Unitholders,” he said.
In addition to the proposed merger, Folkestone Real Estate Management, the responsible entity for FST, has announced it has entered into a “legally binding sale agreement” to sell the nine million units it holds in FET to Folkestone for a price of $1.86 per share.
