Urban Logistics Regulatory News (SHED)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE OR OTHERWISE. THERE CAN BE NO CERTAINTY THAT ANY OFFER WILL BE MADE.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION (EU) NO 596/2014 (WHICH FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018) ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THE INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN FOR THE PURPOSES OF MAR.

FOR IMMEDIATE RELEASE

20 February 2024

Urban Logistics REIT PLC

Approach to abrdn Property Income Trust Limited re possible combination

Urban Logistics REIT PLC ("Urban Logistics" or the "Company") announces that it has approached the Board of abrdn Property Income Trust Limited ("API") and its advisers regarding an indicative share-for-share offer for the entire issued and to be issued share capital of API. Urban Logistics has been provided access to certain API due diligence materials and a number of discussions have taken place with API and its advisers.

On Friday 16 February 2024, the Company tabled an indicative proposal to API and its advisers comprising an Indicative Offer exchange ratio of 0.469 Urban Logistics shares for each API share (the "Indicative Offer"). The Indicative Offer exchange ratio was predicated on, prior to completion of any transaction:

· Urban Logistics paying a dividend to its existing shareholders of 2.45p per Urban Logistics share in respect of the period up to 31 December 2023 (the "Urban Logistics Special Dividend"(1)); and

· API paying a dividend to its existing shareholders of 1p per API share in respect of the quarter ended 31 December 2023.

Following completion of the proposed transaction, all shareholders of the enlarged group would rank pari passu for any dividends subsequently declared by the Company.

The Indicative Offer represents an offer value of approximately 59.2p per API share based on the Company's share price of 128.6p as at close on 19 February 2024 (being the last business day prior to this announcement) adjusted downwards for the Urban Logistics Special Dividend. This compares to the current value of the Custodian Property Income REIT plc ("Custodian") offer which stands at approximately 52.4p per API share based on the Custodian share price of 67.2p as at close on 19 February 2024. On the basis of the foregoing, the Indicative Offer represents a premium of approximately 13% to the Custodian offer.

Urban Logistics believes that there are compelling reasons for an Urban Logistics-API combination and further believe that the Indicative Offer represents a superior proposal for API shareholders as well as an attractive strategic acquisition for the Company.

In accordance with paragraph 4(c) of Appendix 7 of the Code the Panel will set the date by which the Company must clarify its intentions with regard to any offer for API.

Urban Logistics duly considered this position prior to making this announcement and decided on balance that the announcement should still be made so that API shareholders had the opportunity to review its contents.

The Board of Urban Logistics believes that a potential combination between the two companies would be attractive to both API and Urban Logistics shareholders, affording them exposure to a specialist last mile / urban logistics listed company of scale benefitting from substantial opportunities for rental growth and targeting secure, sustainable, high quality earnings growth. A combination of the two businesses would create a strong FTSE 250 constituent with a combined pro forma market capitalisation of approximately £830m.

The combined group would focus on the last-mile / last-touch mid-box area of UK logistics which the Urban Logistics Board believes exhibits strong growth prospects in contrast with the API-Custodian combination which the Company understands would pursue a generalist strategy across a number of segments of UK real estate, many with, in the view of the Company's Directors, less attractive prospects than logistics. Urban Logistics has built a high quality portfolio of assets occupied by tenants with good covenants giving Urban Logistics a diversified and it believes secure income base. The Company actively discusses its general acquisition strategy with its institutional and wealth management shareholders during its ongoing investor relations programme. The proposed acquisition of API is in line with that strategy.

The enlarged Urban Logistics group would continue to benefit from the Company's highly experienced advisory team, which has produced very strong returns for shareholders delivering a cumulative total accounting return of 111.6% over the period from its flotation in April 2016 to 30 September 2023. Urban Logistics shareholders recently voted to extend the Company's external asset management arrangements and Urban Logistics is served by a very experienced property team. The Company has also benefitted from a high number of off-market acquisitions sourced through the advisory team's strong property sector relationships including the M1 Agency(2).

In light of the relative merits of the combination of Urban Logistics and API summarised below, the Company has today written to API requesting the postponement of API's forthcoming shareholder vote in respect of the proposed Custodian transaction to allow for Urban Logistics and API to complete their respective due diligence and to give the opportunity for a firm Urban Logistics proposal to be put to both Urban Logistics and API shareholders. Given the focused business strategy and strong asset management track record of Urban Logistics, the Company's Directors believe that API shareholders should be given the opportunity to compare the two propositions in detail.

Urban Logistics is a highly experienced business in respect of the acquisition of property portfolios and preparing shareholder documentation in a public company context. It would seek to move quickly to finalise due diligence and complete shareholder documentation to minimise the time period between this announcement and the publication of a formal offer to API shareholders.

Under the Custodian proposals, there would be some reduction in aggregate asset management fees going forward and two of the API directors would be invited to join the board of the combined group. The Company confirms that it would address the combined group governance and the efficiency of management arrangements going forward with the Board of API prior to the announcement of any formal offer to API shareholders.

Urban Logistics' rationale for a combination of the two companies is as follows:

Attractive API portfolio of c. £315m(3) of assets in Industrial and Retail Warehouses

· Urban Logistics knows these assets well from its day-to-day market appraisals and would have bid on all or any one of them had they come up for sale privately;

· The two portfolios are highly complementary given Industrials represents API's largest asset allocation.

Only approximately 9% of the combined portfolio will be outside Logistics and Retail Warehouses(4)

· The combined group would be a focused, specialist REIT operating in a UK real estate sector which benefits from a marked supply-demand imbalance and favourable economic tailwinds.

· Urban Logistics has a value optimisation plan for all of the assets falling outside Logistics and Retail Warehouses and a management team with the experience to execute on those plans.

The Board of Urban Logistics believes it is in a strong position strategically and operationally to optimise total shareholder return for combined group shareholders

· The macro backdrop for logistics real estate in the UK is positive including a favourable demand versus supply dynamic and continued rental growth well ahead of other real estate sectors. These factors are structurally driven as long-term investment into logistics infrastructure continues.

· Urban Logistics sees last mile / last touch assets as a particularly strong area within UK logistics. The Company benefits from a portfolio which it considers to be a good balance of longer, secure income and shorter-term asset management opportunities.

The combined group would offer shareholders substantial scale, growth and liquidity

· The Company's Board and advisory team have built a FTSE 250 REIT with the benefit of a strong institutional shareholder following and support from wealth management and other retail investor channels.

· As a focused, specialist REIT operating in one of the most attractive segments of UK real estate, the combined business would offer shareholders exposure to a specialist vehicle of scale and liquidity with substantial opportunities for rental growth and secure, sustainable high-quality earnings:

o  The only listed entity which has a focus on last mile single-let urban logistics assets - a strategy carefully selected aiming to deliver superior returns;

o  Income and capital growth driven by active asset management and asset recycling;

o  Strong ESG proposition supported by characteristics of single let logistics which lend themselves to ease of adoption of ESG. The majority of the Company's existing properties are currently rated with an EPC of A/B

Urban Logistics has delivered significant shareholder value since inception

· The Company's board has a balanced experience set and has prudently managed the balance sheet:

o  Nigel Rich was chairman of Segro for 10 years

o  The board contains a wealth of broader experience including, inter alia, banking, retail, ESG

o  The board has prudently managed leverage:

§ Urban Logistics has a strong debt position with c.97% of debt fixed/hedged and a low LTV of 29%; and

§ The Company's balance sheet management means it is not in the position of selling down assets to pay down debt

· The Company's investment adviser is led by Richard Moffitt, who has some 25 years experience in the sector, supported by a full finance, property and investment team

· Urban Logistics has delivered cumulative total accounting returns of 111.6% since its IPO in April 2016

The combination would be attractive for both sets of shareholders

· API shareholders, through the Indicative Offer, would be offered access to one of the UK's leading mid box, last mile / last touch real estate portfolio

o  at a 20+ per cent discount to Urban Logistics' net asset value

o  at an Indicative Offer which is (based on the Urban Logistics share price of 128.6p as at close on 19 February 2024 adjusted downwards for the Urban Logistics Special Dividend):

§ a circa 23% premium to the API share price of 48.0p as at close on 18 January 2024 (the day prior to the announcement of the Custodian offer); and

§ a circa 13% premium to the Custodian offer value based on the Custodian share price of 67.2p as at close on 19 February 2024;

o  with an opportunity for continued income growth and growing, sustainable high-quality earnings delivered through active asset management; and

o  with a strengthening debt position for API shareholders c.87% fixed/hedged versus c.61% fixed standalone

This announcement has been made without the consent of API and its advisers ahead of its release.

Important Notes

The making of any firm offer by Urban Logistics is subject to the satisfaction or waiver of a number of customary pre-conditions, including, inter alia, completion of due diligence, waivable at Urban Logistics' discretion.

There can be no certainty that any firm offer will be made, even if the pre-conditions are satisfied or waived. A further announcement will be made in due course.

For the purposes of Rule 2.5(a) of the Code, Urban Logistics reserves the right to make an offer for API on less favourable terms than those set out in this announcement: (i) with the agreement or recommendation of the API Board; or (ii) if a third party announces (after the date of this announcement) a firm intention to make an offer or a possible offer for API which, at that date, is of a value less than the value implied by the Exchange Ratio. Urban Logistics reserves the right to introduce other forms of consideration and/or vary the mix or composition of consideration of any offer.

The Company further reserves the right to adjust the terms of the Indicative Offer to take account of the value of any dividend, return of value or other distribution which is announced, declared, made or paid by API after the date of this announcement other than API paying a dividend to its existing shareholders of 1p per API share in respect of the quarter ended 31 December 2023.

The transaction would be subject to Urban Logistics shareholder approval.

Footnotes

1) It is intended that the Urban Logistics Special Dividend would only be paid in the event of the proposed transaction being completed. This announcement therefore does not constitute a declaration of dividend.

2) The Company regularly uses, as agent for its purchases and sales of assets, M1 Agency LLP, a limited liability partnership in which Richard Moffitt, CEO of the Investment Adviser, has an interest. Each transaction is reviewed by the AIFM and the Investment Adviser (excluding Richard Moffitt) and by the independent Directors to ensure that the fees payable are in line with market fees and practice.

3) As at 30 September 2023.

4) Based on the pro forma combination of the Urban Logistics and API portfolios as at 30 September 2023.

Sources and Bases of Information

In this announcement, unless otherwise stated or the context otherwise requires, the following bases and sources have been used.

All prices quoted for Urban Logistics shares and API shares are closing middle market quotations of an Urban Logistics share or API share (as applicable) derived from the Daily Official List of the London Stock Exchange in respect of the relevant date(s).

· Issued share capital of Urban Logistics is 471,975,411 ordinary shares of 1 penny each.

· Issued share capital of API is 381,218,977 ordinary shares of 1 penny each.

· The pro forma market capitalisation is based on the pro forma number of shares in issue post transaction based on the Indicative Offer exchange ratio of 0.469 Urban Logistics shares per API share and the share price of Urban Logistics on 19 February 2024, being the last business day prior to the date of this announcement

· The financial information relating to Urban Logistics reflects the Company's unaudited results for the half-year ended 30 September 2023.

· The financial information relating to API is extracted from its unaudited net asset value statement for the period ended 30 September 2023, released on 7 November 2023

· Combined portfolio statistics have been derived from figures in the sources referenced above

· Cumulative total accounting return represents the percentage increase in the sum of NTA per share plus cumulative dividends paid over the relevant period compared to the NTA per share at the beginning of such period

Enquiries

Important information

The person responsible for arranging the release of this announcement of behalf of Urban Logistics is Bruce Anderson.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise, or the solicitation of any vote in favour or approval of any offer in any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and any such offer (or solicitation) may not be extended in any such jurisdiction.

Any securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended, or with any securities regulatory authority of any state of the United States and may not be offered or sold in the United States absent registration or an applicable exemption from registration thereunder.

This announcement has been prepared in accordance with English law and the Code, and information disclosed may not be the same as that which would have been prepared in accordance with laws outside of the United Kingdom. The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Disclaimer

Kinmont Limited ("Kinmont"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Urban Logistics and no one else in connection with the possible offer and will not be responsible to anyone other than Urban Logistics for providing the protections afforded to clients of Kinmont nor for providing advice in relation to the possible offer or any other matters referred to in this announcement. Neither Kinmont nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Kinmont in connection with this announcement, any statement contained herein or otherwise.

Singer Capital Markets ("Singers"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Urban Logistics and no one else in connection with the possible offer and will not be responsible to anyone other than Urban Logistics for providing the protections afforded to clients of Singers nor for providing advice in relation to the possible offer or any other matters referred to in this announcement. Neither Singers nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Singers in connection with this announcement, any statement contained herein or otherwise.

Joh. Berenberg, Gossler & Co. KG, London Branch ("Berenberg"), which is authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) and is subject to limited regulation by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Urban Logistics and no one else in connection with the possible offer and will not be responsible to anyone other than Urban Logistics for providing the protections afforded to clients of Berenberg nor for providing advice in relation to the possible offer or any other matters referred to in this announcement. Neither Berenberg nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Berenberg in connection with this announcement, any statement contained herein or otherwise.

Panmure Gordon (UK) Limited ("Panmure Gordon"), who are authorised and regulated by the Financial Conduct Authority (the "FCA") in the United Kingdom, are acting solely for the Company and no-one else in connection with the transactions and arrangements described in this Announcement and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the transactions and arrangements described in this Announcement. Neither Panmure Gordon nor any of their respective partners, directors, officers, employees, advisers, consultants, affiliates or agents are responsible to anyone other than the Company for providing the protections afforded to clients of Panmure Gordon or for providing advice in connection with the contents of this Announcement or for any other matters referred to herein.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.4 information

In accordance with Rule 2.4(c)(iii) of the Code, Urban Logistics confirms that it is not aware of any dealings in API shares that would require it to offer a minimum level, or a particular form, of consideration under Rule 6 or Rule 11 of the Code. However, it has not been practicable for Urban Logistics to make enquiries of all persons acting in concert with it prior to the date of this announcement in order to confirm whether any details are required to be disclosed under Rule 2.4(c)(iii) of the Code. To the extent that any such details are identified following such enquiries, Urban Logistics will make an announcement disclosing such details as soon as practicable, and in any event by no later than the time it is required to make its Opening Position Disclosure under Rule 8.1 of the Code.

Rule 2.9 information

In accordance with Rule 2.9 of the Code, Urban Logistics confirms that, as at the close of business on 19 February 2024 (being the business day immediately prior to the date of this announcement) (the "Latest Practicable Date"), it had in issue 471,975,411 ordinary shares of £0.01 each. Urban Logistics does not hold any ordinary shares in treasury. As at the Latest Practicable Date, the total number of voting rights in Urban Logistics was 471,975,411. The International Securities Identification Number (ISIN) of the ordinary shares, which are admitted to trading on the Premium Segment of the Main Market of the London Stock Exchange, is GB00BYV8MN78. The Company's legal entity identifier is 213800P6ODJW2UFNDC37.

Publication on a website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be made available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on the Company's website (www. urbanlogisticsreit.com) no later than 12 noon (London time) on 21 February 2024. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.