The boards of Custodian Property Income Reit and Abrdn Property Income Trust (API) have reached a mutual agreement to merge through an all-share transaction, forming a substantial £1 billion Real Estate Investment Trust (Reit).
Pending shareholder approval, Custodian Property Income will acquire the entire issued share capital of API, valuing each Abrdn Property Income share at 62.1p, totaling £237 million. This represents a 29.4% premium to the trust’s closing price on January 18.
Under the terms of the merger, current Custodian shareholders will hold a 59.7% stake in the combined trust, with Abrdn trust shareholders accounting for the remaining 40.3%.
API, currently trading at a 42.9% discount to net asset value according to the Association of Investment Companies, will benefit from what the two boards view as complementary portfolios, providing enhanced diversification for shareholders.
Commenting on the merger, David MacLellan, Chair of Custodian Reit, emphasized the importance of security, resilience of cash flows, scale, and liquidity in the current interest rate environment for the success of a Reit. James Clifton-Brown, Chair of API, highlighted the attractive portfolio assembled by Abrdn Fund Managers, focusing on favored market areas, a diversified tenant base, and environmental, social, and governance (ESG) considerations.
API shareholders are expected to retain exposure to the portfolio and its growth prospects at a significant premium to the share price, with the promise of superior share liquidity and an enhanced and fully covered dividend. The API Board believes that, with increased scale and an enhanced capital structure, the combined group will be well positioned for the future.
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By Ravi Kumar
