LondonMetric and LXi agree terms for £4.1bn merger

LondonMetric Property and LXi have agreed terms to an all-share merger which will see the creation of the UK’s fourth-biggest real estate investment trust (REIT), with a value of approximately £4.1bn.

The merger would see the creation of a combined £6.2bn portfolio, with a 93% exposure to the convenience, entertainment, leisure, healthcare, and logistics sectors.

Under the terms of the merger, LXi’s shareholders will receive 0.55 new shares for each LXi share, valuing LXi at £1.9bn. Following completion, existing LondonMetric shareholders will hold approximately 54% of the company, whilst LXi’s shareholders will hold approximately 46%.

Andrew Jones, chief executive of LondonMetric, said: “This is a compelling transaction which creates the UK’s leading triple net lease REIT and underscores our ambitions to leverage our management platform and access exciting new opportunities across the UK real estate market.  

“The deal gives us access to a very well let triple net portfolio of key operating assets and brings together two highly complementary investment approaches that embrace the qualities of income compounding.

“The combined £6.2 billion portfolio will have no legacy assets, full occupancy, high occupier contentment and exceptional income longevity with a high certainty of growth – both organically and contractually. 

“In the world of income compounding, bigger is better and the deal will deliver economies of scale, substantial cost savings, better liquidity and improved terms in both debt and equity markets which will drive accelerated earnings and dividend progression. Increased scale will allow us to look at the widest possible range of opportunities and we will have more tools at our disposal to carry on our trade, which will allow further operating synergies.”

Cyrus Ardalan, chair of LXi, added: “The merger with LondonMetric will build on the strengths and track records of both LXi and LondonMetric. It will create the UK’s leading triple net lease REIT with an enlarged and more diversified portfolio aligned to structurally supported sectors, a robust and predominantly unsecured capital structure, broader appeal to investors and enhanced share liquidity, and a highly regarded internal management team.

“The merger will position the combined group for continued growth and outperformance and the delivery of reliable, sustainable and progressive dividends through the cycle, thereby underpinning superior total shareholder returns.”

In August, LondonMetric completed the takeover of Columbia Threadneedle Property Trust, bringing the REIT’s value to approximately £198.6m.