Custodian REIT PLC (LSE:CREI) said late on Friday that it agreed to acquire Drum Income Plus REIT PLC for £21.4mln.
Under the terms of the deal, Drum shareholders will be entitled to receive 0.530 new Custodian shares in exchange for each Drum share they own, meaning existing Custodian shareholders will own 95.4% of the enlarged group and Drum shareholders 4.6%.
Drum announced on 22 July 2021 that the net asset value per share as at 30 June 2021 was 70.11p and Custodian announced on 27 July 2021 that its NAV per share as at 30 June 2021 was 101.7p.
The board of Custodian said the acquisition presents a strategic opportunity for the trust to add a complementary portfolio with a focus on investing in regional real estate assets and a history of strong performance.
The acquisition is expected to enhance earnings per Custodian share and dividend cover in the first full year of ownership following the acquisition, while also leading to savings of roughly £2.1mln net of stamp duty compared to an equivalent property acquisition.
The Drum board said the acquisition is expected to result in a sustainable increase in the valuation of Drum shareholders' investments due to the higher premium to NAV at which Custodian shares have historically traded compared to Drum shares.
At the closing price of 105.80p per Custodian share, the value of the deal represents a premium of approximately 7.8% to the bid market closing price of 52p per Drum share on 3 August 2021 and 80.9% to the bid market closing price on 4 March prior to the date on which the Drum board announced that it was undertaking a strategic review.