Custodian Property Income REIT PLC (LSE:CREI) (CREI) and abrdn Property Income Trust Limited (API) have announced a definitive all-share merger to create a diversified real estate group with a combined property value exceeding £1 billion.
Under the terms of the merger, API shareholders will receive 0.78 New CREI Shares for each of their shares, pegging the value of each API share at 62.1 pence.
Upon completion, CREI Shareholders and API Shareholders will hold approximately 59.7% and 40.3% of the enlarged entity, respectively.
Dividend policies for both CREI and API will remain unchanged until the merger's effective date. Post-merger, the combined entity is expected to continue focusing on income-driven returns.
The CREI board and the API board hope that their complementary portfolios will “create a differentiated REIT with enhanced diversification and share liquidity and a fully covered and sustainable dividend for the combined group's shareholders”.
The combined portfolio will be 44% weighted to industrial real estate, 20% to offices and 18% to retail warehousing, with smaller stakes in hospitality and high-street retail.
Leadership from both companies have expressed strong support for the merger.
CREI chairman David MacLellan stated: "The board is pleased to announce the merger of CREI and API which it firmly believes will benefit both our existing and new shareholders.
“This transaction creates a well-positioned REIT of significant scale, giving the combined group's shareholders the opportunity to participate in the returns from the complementary API and CREI portfolios with a fully covered and sustainable dividend and a focus on ESG."
James Clifton-Brown, chair of API, added: "API has always sought to focus on delivering attractive income-driven returns for shareholders.
The merger will enable API Shareholders to retain exposure to the portfolio and its growth prospects at a significant premium to API's share price, with the prospect of superior share liquidity and an enhanced and fully covered dividend."