Scale the goal as UK logistics REITs consolidate for the future
UK logistics specialist Tritax Big Box REIT’s proposed takeover of UK Commercial Property REIT to create a £6.3 billion logistics property portfolio, unveiled yesterday, further highlights the consolidation currently underway among UK logistics real estate companies.
In January the boards of LondonMetric and LXi REIT announced that they had agreed terms for these two companies’ recommended all-share merger in a deal which will create a combined £6.2 billion portfolio. The following week, Custodian Property Income REIT announced an all-share merger with Abrdn Property Income Trust, creating a £1 billion portfolio.
And, in a similar move, yesterday Blackstone announced that it will merge two of the companies that it has taken into private hands, St Modwen Logistics and Industrials REIT, in order to form new company Indurent with a 26 million sq ft (2.4 million sq m) portfolio.
Clearly the achievement of scale has particular attractions for those in the logistics property sector. Among these benefits Tritax Big Box and UK Commercial Property REIT include their shared focus on resilient and growing income; creating a broader range of property sizes and tenant uses; providing additional scope for asset management and capital recycling; capitalising on new and existing investment and development opportunities including Tritax Big Box’s land holdings; as well as cost savings from combining their management, administrative and other operational expenses.
Both the Tritax Big Box/UK Commercial Property REIT and the LondonMetric/Lxi REIT mergers each asserted that they will create the UK’s fourth largest REIT – in the former case owing to an expected market capitalisation of £3.9 billion, and in the latter case, by reference to its £4.1 billion net tangible assets. And with such similar sized portfolios, there will be close contention the for fourth and fifth slots.
