Custodian Property Income REIT (CREI) now has a rival looking to usurp its position as partner to abrdn Property Income Trust (API) as the listed UK property sector looks set for a tug of war.
In January, CREI and API said they had agreed terms for a £1 bn (€1.2 bn) merger.
However, it is has emerged that last Friday, Urban Logistics REIT approached API with an alternative bid with a different strategy to create a last-mile logistics property company as opposed to a generalist.
Urban Logistics especially admires API’s £315 mln of industrial and retail warehouses, which it claims it knows well and would have bid for had they come on the market privately.
The proposal involves an exchange ratio of 0.469 Urban Logistics shares for each API share. Urban Logistics would pay a dividend to existing shareholders of 2.45p per Urban Logistics share in respect of the period up to 31 December 2023 and API would pay a dividend to its existing shareholders of 1p per API share in respect of the quarter ended 31 December 2023.
The indicative offer represents an offer value of approximately 59.2p per API share based on the company’s share price of 128.6p as at close on 19 February 2024.
According to Urban Logistics, its rival has tabled an offer which stands at approximately 52.4p per API share based on the CREI'S share price of 67.2p as at close on 19 February 1 2024. That means the new bid represents a premium of approximately 13% to the CREI offer, it said.
Should Urban Logistics’ tilt at API succeed, it would create a £830 mln company. Urban Logistics was established in April 2016 and listed on the AIM market of the London Stock Exchange with a market cap of just £10 mln.
Focus versus Generalist?
It said: ‘A combination of the two businesses would create a strong FTSE 250 constituent with a combined pro forma market capitalisation of approximately £830 mln.'
‘The combined group would focus on the last-mile / last-touch mid-box area of UK logistics which the Urban Logistics board believes exhibits strong growth prospects in contrast with the API-Custodian combination which the company understands would pursue a generalist strategy across a number of segments of UK real estate, many with, in the view of the company’s directors, less attractive prospects than logistics.’
Only approximately 9% of the combined portfolio would be outside logistics and retail warehouses, and therefore the combined group would be a focused, specialist REIT operating in a UK real estate sector which benefits from a marked supply-demand imbalance and favourable economic tailwinds.
It further argues it would become the only listed entity with a ‘focus on last mile single-let urban logistics assets – ‘a strategy carefully selected aiming to deliver superior returns’.
API said in a statement it had noted Urban Logistics’ announcement and made the customary statement there could be no guarantee of a formal offer.
