London-listed real estate investment trust (REIT) LondonMetric is buying smaller listed competitor CT Property Trust (CTPT) for £199m (€225m).

The FTSE 250 listed UK-REIT is offering a 34.3% premium to CTPT’s last closing price of 63.7p by giving CTPT shareholders 0.455 new LondonMetric shares for each CTPT share held. LondonMetric shares are trading at around 188p, valuing the company at £1.85bn.

LondonMetric owns listed logistics platforms alongside a grocery-led long-income portfolio. As of 31 March 2023, it owned £3bn of real estate assets across 16.1m sqft.

Columbia Threadneedle managed CTPT’s property portfolio, which consists of 34 properties valued at £288.3m, 56% of which are industrial, logistics and distribution assets, 21.9% retail warehousing, 15.7% offices, and 6.4% high street retail assets.

Patrick Vaughan, chairman of LondonMetric, said: “The CTPT management team has assembled a high-quality platform of complementary assets, diversified by tenant base and geography and with significant reversionary potential. The acquisition grows the combined group’s exposure to the winning sectors of urban logistics and long income, underpinned by evolving consumer demand and delivering strong rental growth.

“In the current interest rate environment, we believe resilient cash flows, scale and liquidity will be the defining characteristics that differentiate the winners and the losers. The income and income growth characteristics of the CTPT portfolio, combined with select asset management opportunities, should enhance our total return focus, whilst enabling us to drive earnings optimisation and maintain our progressive dividend policy.”

Davina Walter, chairman of CTPT, said LondonMetric also has a portfolio with high exposure to the industrials sector and a proven track record in delivering returns from this asset class, adding that the portfolio fit is compelling.

Walter said: “Despite the progress made in pivoting the portfolio, excellent long-term portfolio performance and regular dividend payments, CTPT has traded at a double-digit discount to NAV for a number of years. We believe this is reflective of our small size and external market conditions.

“This acquisition by LondonMetric allows our shareholders to benefit from being exposed to an enlarged UK-REIT with an approximately £3bn property portfolio, continuously growing dividends and an outstanding track record of shareholder value creation.”

The acquisition also represents a compelling premium to the CTPT share price, Walter said, adding that “we therefore recommend the acquisition to shareholders”.

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