Urban Logistics REIT has tabled a rival bid to acquire abrdn Property Income Trust (API) just weeks after Custodian Property Income REIT put forward proposals for an all-share merger with API.
Urban Logistics’ share-for-share offer for the entire issued and to be issued share capital of API would create a FTSE 250 vehicle with a market cap of circa £830m.
The value of the offer is approximately 59.2p per API share based on the company’s share price of 128.6p as at close on 19 February 2024. This represents a circa 13% premium compared with the current value of the Custodian offer which stands at approximately 52.4p per API share based on the Custodian share price of 67.2p as at close on 19 February 2024.
The board of Urban Logistics said a potential combination between the two companies would be attractive to both API and Urban Logistics shareholders, “affording them exposure to a specialist last mile/urban logistics listed company of scale benefitting from substantial opportunities for rental growth and targeting secure, sustainable, high quality earnings growth”.
Andrew Saunders, equity research analyst – real estate at Shore Capital, said: “We believe the positives outweigh the negatives with this merger proposal and we are supportive given the available details. We continue to believe there is an attractive investment case for SHED [Urban Logistics REIT], with strong rental growth continuing to be delivered in a supply-constrained market and the benefits of asset management initiatives helping drive further growth in earnings… and dividends too in FY25F.
“The investment market for industrial and logistics assets is regaining momentum with more investors returning to the market along with stabilising yields. The current 23% share price/NTA discount looks highly appealing in our view along with a 6.1% dividend yield (excluding the potential special dividend). We remain happy with our BUY recommendation, believing the stock remains an attractive play on the sought after last-mile, single-let urban logistics sector.”
