The boards of two real estate investment trusts have agreed the terms of a proposed merger, which would create one of the UK’s biggest Reits.
The merger of Tritax Big Box Reit and UK Commercial Property Reit would create a £4.4bn Reit.
Under the terms, each Commercial Property shareholder would be entitled to receive 0.444 new Tritax Big Box shares for each share they already have.
A note from analysts at Peel Hunt described the proposal as a good deal for Commercial Property shareholders but said it was unlikely to be a ‘game changer’ for Tritax shareholders.
However, the analysts claim not everyone is on board with the merger.
Margaret Littlejohns, senior independent director of UK Commercial Property said: “The UKCM recommending directors believe this transaction allows all UKCM shareholders to benefit from continued investment in a Reit, but with significantly larger scale and improved share liquidity, as well as addressing the factors we believe have contributed to the persistent discount at which UKCM’s shares have traded for many years.
“The combined business will be invested in a high-quality UK logistics portfolio, where BBOX has a strong track record of delivering attractive, sustainable returns which will drive improved earnings for UKCM shareholders and support a fully covered dividend.”
While Aubrey Adams, Tritax Big Box’s chairperson, said the merger would has a “compelling strategic and financial rationale”.
He said: “This combination represents a continuation of the highly successful strategy that BBOX has delivered since IPO and which over recent years has included acquiring selected ‘last mile’ and urban logistics assets.
“Shareholders in the combined group will benefit from immediately identifiable cost savings creating increased scope to deliver higher earnings and dividends, while capital recycling and asset management opportunities in the UKCM portfolio represent significant further opportunities to enhance total shareholder returns.”
tara.o’connor@ft.com
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