Tritax Big Box has reached an agreement to buy rival UK Commercial Property REIT (UKCM) for £924million.
The warehouse giant, which major tenants include Ocado, Amazon and B&Q, said the combination of the two firms will create a real estate giant worth £3.9billion, with a property portfolio of £6.3billion focused on the logistic sector.
The warehouse giant, which major tenants including Ocado, Amazon and B&Q, struck a deal for £924million
Subject to shareholder approval, the deal will see UKCM shareholders hold 23.3 per cent of the combined entity.
UKCM, which is the much smaller of the two companies, has a portfolio investing in shopping centres, office buildings and distribution centres.
The deal will value UKCM at 71.1p per share, which Tritax said represents a 10.8 per cent premium on its rival’s share price at the end of trading on Friday.
Commercial property in the UK has taken a hammering in recent years as higher interest rates have hit valuations of buildings across a wide range of sectors including shops and offices.
Tritax told investors that the move will ‘bring together complementary logistics-oriented investment portfolios with a shared focus on resilient and growing income’.
The firm added the deal would ‘enhance the overall customer offering through a high-quality logistics portfolio across a broader range of property sizes and tenant uses, from ‘Mega-Boxes’ to smaller, strategically located, logistics assets within key urban locations’.
It is the latest in a spate of M&A activity in the REIT sector since 2019.
Last February, it was revealed that a £5billion merger of two of London’s biggest landlords, Capital & Counties Properties and Shaftesbury would go ahead after getting the all-clear from competition regulators.
The Competition and Markets Authority (CMA) investigated the deal over fears the merger could lead to a dominance in the West End, which may lead to ‘a substantial lessening of competition’. It cleared the two companies after a two-month probe.
The now Shaftesbury Capital said in November that sales at shops, bars and other businesses run by tenants so far in the second half of the year were 16 per cent up on 2019 levels.
Shares in UKCM were up 5.14 per cent to 67.50p in early afternoon trading on Monday, while Tritax shares were down 2.81 per cent to 155.70p.
DIY INVESTING PLATFORMS
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
