Custodian Property Income REIT (CREI) and abrdn Property Income Trust (API) have announced a merger agreement, forming a £1 bn (€1.2 bn) real estate investment trust with around 200 assets.
Each API shareholder will receive 0.78 of a CREI share for each share held, sending their stock up 10%.
The deal values API at £237 mln (€276 mln) based on Custodian's closing share price of 79.6 pence.
Following the merger, existing CREI shareholders would hold 59.7%, and API shareholders 40.3% of the combined group.
CREI said it has 3.1% acceptances already for the offer from API shareholders.
CREI chairman David MacLellan said: ‘This transaction creates a well-positioned REIT of significant scale, giving the combined group's shareholders the opportunity to participate in the returns from the complementary API and CREI portfolios with a fully covered and sustainable dividend and a focus on ESG.’
James Clifton-Brown, chair of API, added: ‘API has always sought to focus on delivering attractive income-driven returns for shareholders. The merger will enable API Shareholders to retain exposure to the portfolio and its growth prospects at a significant premium to API's share price, with the prospect of superior share liquidity and an enhanced and fully covered dividend.’
The two companies will keep their current dividend policies. API will pay a final dividend of up to 1.0 pence per share for the quarter ended 30 December, while CREI will pay a interim dividend of up to 1.375 pence
Two API directors join the combined board, which will have eight members. Both boards recommend the merger to their shareholders, targeting completion by early April.
Custodian Capital would provide investment management, administrative, and advisory services to the combined group following the merger. It will waive its management fee concerning the net asset value attributable to API for the first nine months after the merger, and reduce the management fees payable by CREI to the firm for two years.
The deal is the latest in a string of abrdn fund takeovers, marking another chapter in the consolidation of the property investment trust space.
