Assura takeover candidate15 Feb 2024 09:04
Picking out hot properties……..Assura mentioned as potential takeover candidate from todays’s Times.
Mergers between landlords are all the rage at the moment. Shaftesbury and Capital & Counties, which own a chunk of London’s West End, did it last year; LondonMetric and LXi Reit struck a deal last month; and now it is the turn of Tritax Big Box and UK Commercial Property Reit, the pair of warehouse owners.
The reasoning is fairly simple: to get bigger, which is what investors increasingly are demanding. Debt is much more expensive now and tapping shareholders for more money is a no-no, given that most landlords’ shares are trading at sizeable discounts to their net asset values. Merging with a peer is seen as the quickest and easiest way to add scale
There is an expectation that more deals will be done over the coming months, but who might be next? Andrew Saunders, a real estate analyst at Shore Capital, has had a stab. He thinks Warehouse Reit and Urban Logistics Reit, which between them own almost £2 billion of sheds, “could be in play in 2024”.
Most of the merger activity so far has focused on companies run by external managers, but Saunders reckons that does not mean “internally managed ones will remain exempt”. Among the “obvious candidates” here, he says, are Assura and Primary Health Properties, which own dozens of doctors’ surgeries and medical centres nationwide.
Perhaps the standout tie-up that Saunders thinks is possible is between Derwent London and Great Portland Estates, the two big London office developers.
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