Custodian Property Income REIT has reiterated its view that shareholders should opt for its agreed merger with Abrdn Property Income Trust rather than a proposed offer for API from Urban Logistics REIT.
The Custodian board said in a stock market update that the recommended merger represents “a superior offer and premium” to Urban Logistics’ indicative offer “on both an undisturbed (+5%) and current share price (+6%) valuation”.
It added that Custodian and API’s “complementary portfolios” mean neither would have to “undertake a shift in investment strategy or risk-return profile” after the merger.
“The CREI board believes the ULR indicative offer, if made, introduces several material execution risks for API shareholders both in the transaction itself and subsequent strategy implementation,” the Custodian board said. “ULR’s near-term refinancing requirements present a clear risk to earnings and dividend growth.”
Custodian also said it believes a wind-down of API is likely if its own merger does not complete. “The CREI board believes that the returns potentially available to API shareholders from the recommended merger are superior to those from a managed wind-down, with the latter potentially involving value erosion from the sale of assets into a sub-optimal property market, deterioration in the share price and share trading liquidity in light of declining investor interest, reducing earnings, and an increasing cost burden and portfolio concentration.”
A court meeting and API general meeting on the Custodian merger is set for 20 March.
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