Picton and UK Commercial Property REIT (UKCM) are in discussions regarding a possible all-share merger of the two companies on an EPRA NTA for EPRA NTA basis.
In a statement issued earlier today, UKCM said: “UKCM is aware of speculation and confirms that it is in discussions with Picton Property Income in relation to a possible all-share merger on an EPRA NTA for EPRA NTA basis. There can be no certainty either that an offer will be made nor as to the terms of any such offer. A further announcement will be made in due course.”
In a statement, Picton said it “reserves the right to make an offer for UKCM on less favourable terms than those set out in this announcement: (i) with the agreement or recommendation of the board of UKCM; or (ii) if a third party announces a firm intention to make an offer for UKCM which, at that date, is of a value less than the value implied by the possible merger”.
Picton is required to announce a firm intention to make an offer or announce it does not intend to make an offer by 5pm on 6 December.
UKCM owns a £1.27bn portfolio of diversified assets across the UK. The company issued its Q3 2023 update earlier today, which showed its portfolio valuation decreased marginally by 0.3%.
Speaking about its results, Peter Pereira Gray (pictured), chair of UKCM, said: “The third quarter results show a further stabilisaton in values as the company continues to benefit from the quality of its well let and diverse portfolio. This, together with our leasing momentum, where we have continued to agree rates well ahead of current rents and in line with rental value, have led to a positive total return for the period as well as growth in earnings over the same period last year.
“While we continue to be aware of the broader macro conditions and the uncertainty that these present, we remain optimistic about the company’s ability to drive value, income and earnings through successful asset management and capturing the near term reversionary potential in the portfolio.”
Will Fulton, lead manager of UKCM at abrdn, added: “Occupier demand has remained strong during the third quarter and while our high occupancy has meant there have been fewer leasing events in the period under review, those we have transacted were at levels well above the previous rents. On top of that, there are a number of near term opportunities to capture further rental uplift and reversion across the portfolio, which will help us drive further earnings growth.
“In doing so I am pleased with the action we have taken to carefully control our low debt levels through prudent balance sheet management. The stabilisation of our NAV demonstrates the quality of the properties we own and the advantages of both a diversified investment strategy and our deliberate weighting towards future-fit sectors, such as industrial and logistics, which benefit from compelling structural and demographic tailwinds.”
