11th Jan 2024 10:49
(Alliance News) - Fresh from bolstering its portfolio with the buy of CT Property Trust, LondonMetric Property PLC has turned to M&A once again, this time sizing up an LXi REIT PLC tie-up.
The duo announced an all-share merger on Thursday, roughly three weeks after announcing they were in discussion over a potential combination.
The merger will see LondonMetric takeover LXi REIT, whose shareholders will receive 0.55 of a new LondonMetric share for each LXi REIT share that they own. LondonMetric shareholders will own 54% of the enlarged company and LXi holders the remaining 46%. It will create the UK's fourth-largest real estate investment trust.
At the undisturbed price of 197.4 pence per LondonMetric share on December 15, the last trading day before the announcement, the deal values LXi REIT's equity at GBP1.9 billion.
LondonMetric shares rose 2.3% to 188.30p each in London on Thursday morning. LXi traded 0.2% higher at 103.19p.
"This is a compelling transaction which creates the UK's leading triple net lease REIT and underscores our ambitions to leverage our management platform and access exciting new opportunities across the UK real estate market," LondonMetric Chief Executive Andrew Jones said.
"The deal gives us access to a very well let triple net portfolio of key operating assets and brings together two highly complementary investment approaches that embrace the qualities of income compounding."
The LondonMetric and LXi combination is the second bit of deal-making action of the week in the London-listed property sector this week, after Belvoir Group PLC and Property Franchise Group PLC announced a tie-up.
It is not, however, the first time in recent memory that LondonMetric has turned to M&A.
In May, it agreed to buy CT Property Trust Ltd in an all-share deal worth GBP198.6 million. That acquisition was sealed in August.
Shore Capital Markets analyst Andrew Saunders labelled LondonMetric "the super consolidator".
"LondonMetric has this morning announced a recommended acquisition of LXi REIT through an all-share deal, albeit subject to approvals from shareholders, lenders, respective company boards and the usual due diligence and consents. Such news was of little surprise to us, knowing the strong deal-making appetite and experience of the LondonMetric team and opportunities presented by a depressed market backdrop for UK REITs," Saunders said.
"The rationale is straightforward - acquiring a complementary portfolio of assets at a discount to their market value with the opportunity to create value through scale and synergy benefits. In the words of LondonMetric CEO, Andrew Jones, this is not his “first rodeo” and he can draw on significant experience and an exemplary track record here with deals that have included the merger of Metric Property Investments and London & Stamford in 2013, A&J Mucklow in 2019 and CTPT in 2023."
Shore's Saunders believes the deal makes "good sense for shareholders".
"LondonMetric has managed to avoid the recent beartraps befalling many of its peers and with a strong set of recent results confirming further growth and stabilised asset valuations, the shares have enjoyed one of the best relative performances and retain a high rating," the analyst added.
"We have predicted for some time that corporate activity would lead to a sector of fewer but stronger, bigger UK REITs and as 2024 gets underway, the super consolidator strikes again."
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
LXI.LLondonMetricPropty FranchisBLV.L