(Alliance News) - LondonMetric Property PLC on Wednesday said it has agreed to buy CT Property Trust Ltd, in a move designed to boost the size and resilience of its asset portfolio.
LondonMetric has agreed to buy CT Property for 85.5 pence per share, in an all-share deal worth GBP198.6 million. This represents a premium of 33% to the three-month average price of 64.2p and 36% to their close on Tuesday of 63.0p. CT Property shares were up 22% to 78.00 pence each in London on Wednesday.
LondonMetric shares were down 7.5% at 174.00p.
LondonMetric will issue 0.455 of a LondonMetric share for each CTPT share, giving CT Property shareholders a 9.7% stake in LondonMetric.
LondonMetric said the acquisition would create a "larger and more resilient" combined group, with gross property assets of GBP3.3 billion, comprising 72% distribution and industrial assets.
CT Property also lauded the positive impact of the deal on its prospects. The board commented that it was unlikely CT Property would have overcome the challenges it faced as an independent UK real estate investment trust in the short to medium term.
LondonMetric also said Wednesday that it has exchanged on the sale of a DHL logistics warehouse in Solihull for GBP20.5 million. The 142,000 square foot warehouse was acquired in 2017 as part of a portfolio with an allocated purchase price of GBP15.7 million.
The sale crystallises an ungeared internal rate of return of 9% on the property, LondonMetric said.
"With the recent strengthening in the investment market, we have reacted to an opportunistic off market approach to sell this warehouse. The proceeds of the disposal will be used to further reduce our floating rate debt and LTV," said Chief Executive Andrew Jones.
The FTSE 250-listed property investor also on Wednesday released a mixed set of annual results.
For the financial year that ended March 31, LondonMetric posted net rental income of GBP144.1 million, up 11% from GBP130.0 million year-on-year. Revenue similarly increased 10% to GBP146.7 million from GBP133.2 million.
However, the company swung to a pretax loss of GBP506.3 million from profit of GBP734.5 million a year prior. Loss per share was 51.8p, swung from earnings per share of 78.8p the previous year.
This came as administrative costs rose to GBP16.4 million from GBP16.0 million. The bottom line also was hurt by reduced property valuations. LondonMetric reported a GBP587.5 million revaluation of property deficit, as well as a loss on disposals of GBP15.4 million.
On an EPRA basis, earnings increased to GBP101.1 million from GBP93.5 million, while earnings per share increased by 2.9% to 10.33p from 10.04p.
LondonMetric declared a dividend of 9.50p, up 2.7% from 9.25p year-on-year.
"The last year has seen a weaker economic backdrop, elevated inflation and a significantly higher interest rate environment. Not surprisingly, this has led to a recalibration of real estate values and conditions that have undoubtedly impacted our approach to leverage and interest rate exposure," said Chief Executive Andrew Jones.
He added: "Looking forward, we have a strong conviction that our portfolio is firmly positioned on the right side of the long term structural shifts and that it will continue to generate reliable, repetitive and growing income to deliver on our progressive dividend policy."
By Holly Beveridge, Alliance News reporter
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