Warehouse REIT has received an offer for the company from private equity houses Blackstone and Sixth Street Partners valuing the company at around £470m.

The consortium said that it made the offer (its fourth indicative all cash proposal) to the board of Warehouse REIT on 23 February 2025.

The offer price of 110.5p per share was rejected by the board on 28 February 2025. The indicative proposal, which includes the third interim dividend of 1.6p per share declared on 19 February 2025, valued Warehouse REIT at around £470m, and represents:

• a premium of 34.1% to the closing price of 82.4p on 28 February 2025;
• a premium of 34.8% to the one-month volume weighted average share price of 82.0p on 28 February 2025;
• a premium of 36.9% to the three-month volume weighted average share price of 80.7p on 28 February 2025; and
• a premium of 0.8% to the two-year high closing share price of 109.6p on 17 April 2023.

Offer at a 14.6% discount to NAV

However, the offer price is a 14.6% discount to the company’s EPRA net tangible assets (NTA) per share of 127.5p (at 30 September 2024) when the dividend is taken off the offer price.

[QD comment: Here is yet another offer for a real estate company at a substantial discount to NAV – based on a portfolio valuation that was made at close to the bottom of the market. It goes without saying that it makes very little sense to be selling at the bottom of the market, especially as the market fundamentals remain strong and values are starting to pick up. This seems a very opportunistic bid from Blackstone (which has already hoovered up St Modwen and Industrials REIT over the past few years) and the board of Warehouse REIT should be commended for rebuffing it.

Property companies are open to these opportunistic bids due to the wide discounts to NAV that they have traded on since mid-2022 when interest rates started to rise. Despite many takeovers at substantial premiums to share prices, there has been little share price reaction and read across to other companies and until that happens the sector will continue to be targeted by private equity companies that do recognise the value on offer.]

The consortium said that it believes the proposal “provides a highly deliverable and compelling alternative to shareholders, attributing a full valuation for the company and its future prospects.

It added that it was considering its position and accordingly there can be no certainty that any offer for the company will be made.

Warehouse REIT’s board said that it considered the proposal and, following consultation with the company’s largest shareholder (Investec, which holds nearly 15%), decided unanimously to reject it on the basis that it materially undervalues Warehouse REIT and its assets.

A further announcement will be made as appropriate.