Thorpe Park and Alton Towers landowner LXi REIT PLC (LSE:LXI) is in talks over a potential merger with LXi REIT PLC (LSE:LXI), which would create the fourth largest landlord on the London stock exchange.
LXi said it was “in discussions regarding a possible all-share merger” with LondonMetric at a time when the property industry is expected to consolidate.
If the two combined, the new entity would have a property value of about £6.4 billion.
The talks come a month after UK Commercial Property REIT (LSE:UKCM) walked away from a £1 billion merger with Picton.
Shore Capital believes the increase in consolidation in the industry is based on companies trying to add value at a time when market valuations are at a meaty discount to property values.
Currently, the market values LXi at £1.78 billion and LondonMetric at £2.09 billion.
Both firms have avoided exposure to challenging commercial property sectors like offices and shopping centres, focusing instead on resilient segments such as warehouses, stores, hotels, and entertainment.
LXi previously expanded its footprint in 2022 by merging with Nick Leslau’s Secure Income Reit, significantly boosting its size and acquiring assets like Thorpe Park, Alton Towers, and Warwick Castle.
LondonMetric, historically involved in retail parks and offices, has shifted its focus primarily to warehouses.
Shares in LondonMetric are down 2% at 191p on Tuesday, while LXi is flat at 103p.