Custodian and Abrdn agree terms to £1bn merger

19th January 2024 | Jack Oliver

Custodian Property Income REIT (CREI) and Abrdn Property Income Trust (API) have agreed terms to an all-share merger to create a combined group with a portfolio worth over £1bn.

Under the deal, CREI will acquire the entire issued and to be issued share capital of API, which is valued at approximately £237m.

Following completion of the Merger, existing CREI Shareholders will hold approximately 59.7 per cent whilst API Shareholders will hold approximately 40.3 per cent.

The two groups said they share an income-focused investment strategy with an emphasis on regional and below-institutional sized assets that are well-positioned to capture the rental growth and yield advantage available in order to generate higher income returns and capital growth for shareholders.

The combined group’s portfolio includes retail warehousing and high street retail, which make up 18% and 6% respectively.

David MacLellan, chairman of CREI, said: “This transaction creates a well-positioned REIT of significant scale, giving the combined group’s shareholders the opportunity to participate in the returns from the complementary API and CREI portfolios, with a fully covered and sustainable dividend and a focus on ESG.

“In the current interest rate environment, security and resilience of cash flows, scale and liquidity, supported by a clear and compelling strategic direction are the defining characteristics of a successful REIT. 

“The challenges the wider listed property sector has faced over the last 18 months highlight the merits of CREI’s differentiated approach and operational robustness, which contribute to CREI’s strong rating relative to its peers.”

James Clifton-Brown, chair of API, added: “API has always sought to focus on delivering attractive, income-driven returns for shareholders.

“Over the years, API’s manager, abrdn Fund Managers, has assembled an attractive portfolio on the company’s behalf, with a weighting to more favoured areas of the market, a diversified tenant base and a focus on ESG.”

Earlier this month, LondonMetric Property and LXi agreed terms to an all-share merger which will see the creation of a real estate investment trust with a value of approximately £4.1bn.


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