2 REITs Sell For Combined £1.2B As Consolidation Continues
The consolidation in the UK listed real estate sector continues, with two REITs agreeing to be sold for a combined total of nearly £1.2B on Friday.
LondonMetric Property said it would buy Urban Logistics REIT for £700M in a cash-and-shares deal, and U.S. senior living specialist CareTrust REIT completed a deal to buy smaller UK equivalent Care REIT for £450M.
The price LondonMetric is paying for Urban Logistics REIT represents a 21% premium to the latter’s share price but a 3% discount to its net asset value. After the deal, LondonMetric shareholders will own 89% of the combined company’s shares, with Urban Logistics stockholders owning 11%.
Buying Urban Logistics partly in shares means that if the combined company performs well, both sets of shareholders share the upside.
The deal represents a quick win for activist investor Achilles, which in March called for a general meeting of Urban Logistics REIT, in which it owns shares, to discuss the future strategy of the company.
It is the second listed company LondonMetric has bought in just over a year, following its £1.9B purchase of LXi REIT in March 2024.
The combined company will have a portfolio valued at about £7.3B, and LondonMetric CEO Andrew Jones said urban logistics as a sector was its top pick for rental growth over the coming years.
In the case of Care REIT, CareTrust offered 108p per share for the company. That is a premium of 33% to its share price before the offer was announced but a discount of 9% to the net value of its assets.
Care REIT owns a portfolio of 137 care homes across the UK comprising 7,700 beds. They are leased to 15 tenants. The portfolio is valued at £679M and produces £51M a year in rent. The company has £193M of debt, and the portfolio has average lease lengths of 20.5 years.
CareTrust is listed on the New York Stock Exchange and has a market capitalisation of $4.9B. Its portfolio covers 34 states in the U.S., with more than 400 net-leased properties totalling approximately 43,000 operating beds leased to 34 operators.
