The boards of Tritax Big Box REIT (BBOX) and Warehouse REIT have reached agreement on the terms of a recommended cash and share offer, in which BBOX will acquire Warehouse REIT – trumping the current Blackstone offer.

Under the terms of the acquisition, each Warehouse REIT share will be entitled to receive 0.4236 new BBOX shares and 47.2p in cash. In addition, Warehouse REIT shareholders will retain the quarterly dividend of 1.6p to be paid on 25 July as well as retaining the quarterly dividend on 6 October.

Based on BBOX’s closing price of 150.6p, this represents 111.0p per Warehouse REIT share and 114.2p including the dividends. This values Warehouse REIT’s entire issued, and to be issued, ordinary share capital at around £485.2m.

This represents a premium of 38.6% to Warehouse REIT’s closing price of 82.4p before bidding for the company commenced and a premium to the value of the Blackstone offer of 4.8%.

Based on BBOX’s last reported EPRA NTA of 185.6p (as at 31 December 2024), the acquisition represents a discount of 1.7% to Warehouse REIT’s last reported EPRA NTA of 128.0 pence (as at 31 March 2025).

[QD comment: This is pleasing to see, as we have said on a number of occasions, the Blackstone deal was substantially undervaluing the company in our view. It is the second time in a week that a listed peer has come in and (seemingly) beaten off competition from private equity bids following PHP’s recommended offer for Assura – long may it continue. We have seen too many REITs taken out by private equity on the cheap.]

Highlights of the deal

The boards of Warehouse REIT and BBOX said that they believe that the acquisition has a compelling strategic and financial rationale for both sets of shareholders. They said that this included:

• Leading listed UK logistics REIT: Consolidates BBOX’s exclusive position as the leading listed UK logistics pure-play platform with an enhanced portfolio value of £7.4 billion and provides shareholders with increased liquidity, a lower cost of capital and listed ownership of the sector with structural dynamics supporting long-term prospects.
• Complementary and attractive market fundamentals support long-term rental growth: Continued competition for land use in urban settings, and sustained underlying demographic trends, leads to both a significant reduction of logistics space in UK cities and constraints on new supply due to a scarcity of sites and the significant costs involved.
• Attractive offer composition: The Offer provides an attractive blend of cash, providing Warehouse Shareholders with certainty, and New BBOX Shares, which provide the potential to participate in future earnings growth and improvements in the property cycle.  
• Strategic alignment: Marks a continuation of BBOX’s strategy of enhancing overall risk adjusted returns by complementing its big box logistics portfolio with assets in the urban and last mile markets, in key micro-locations and underpinned by a diverse tenant base, and further enhancing its customer offering via a broader range of property size, location and uses.
• Sizeable near-term rent reversion: Shorter-dated leases with significant exposure to open market rent reviews, provide an accelerated pathway to capturing the 25 per cent. of rental reversion in Warehouse’s urban logistics assets, complementing the 28 per cent. rental reversion within the BBOX portfolio.
• Enhancing performance via the proven expertise of the Tritax Manager: The combination of Warehouse and BBOX creates additional asset management and development opportunities which the Tritax Manager’s capabilities are well placed to deliver. The Tritax Manager, through its specialism in UK logistics, including multi-let industrial, has extensive asset management capabilities across the full range of asset sizes and a proven track record of enhancing value, as demonstrated through the successful integration of urban logistics assets acquired through the acquisition of UK Commercial Property REIT Limited in 2024. In addition, the Tritax Manager can bring its full development capabilities to bear at Radway Green to maximise and capture the potential value of the site.
• Financial synergies enhance Adjusted EPS accretion in first full year post completion: Delivers immediate cost synergies of £5.5 million per annum through a lower effective fee rate and economies of scale which, together with higher rental income growth, is expected to support Adjusted EPS accretion and dividend progression, alongside an industry leading EPRA cost ratio.
• Compelling returns ahead of BBOX’s cost of capital: BBOX expects Warehouse’s logistics assets to deliver compelling returns ahead of BBOX’s cost of capital over the short to medium-term. BBOX also believes the market has opportunities for value growth in line with the macro-economic environment.

The acquisition is expected to be earnings enhancing in the first full financial year post completion and the combined group is expected to be able to achieve improved financing terms when compared to those which the companies could on a standalone basis, providing a longer-term earnings benefit.

Pro forma leverage of the combined group is expected to be 32%, comfortably within its loan-to-value guidance of below 35%.

Recommendations

Warehouse REIT’s independent directors have withdrawn their recommendation of the Blackstone offer, and instead recommend unanimously that Warehouse REIT shareholders vote in favour of the BBOX offer at a Court Meeting and General Meeting. Directors and principals in the investment manager have irrevocably undertaken to do so in respect of their beneficial holdings representing 6.43% of the company. In total, the BBOX has support of 8.36% of Warehouse REIT shareholders.

Comments

Aubrey Adams, chair of BBOX, said: “This transaction delivers value accretion to both BBOX and Warehouse Shareholders driven by immediate cost synergies, rental reversion and strong structural drivers supporting valuation and income growth in urban and big box logistics. The Board of BBOX is delighted to be able to offer Warehouse Shareholders the opportunity to be invested in the upside potential of the UK’s leading listed logistics real estate portfolio, whilst also providing the certainty of a partial cash offer. The Tritax Manager is well placed to integrate the Warehouse portfolio, and capture the significant reversion, by bringing to bear its broad based and highly relevant asset management expertise, including in multi-let industrial logistics.

“As a Board our conviction in complementing our leading big box portfolio with assets in the urban and last mile markets is driven by significant client demand for assets across the value chain. Shareholders in the Combined Group will benefit from strong risk adjusted returns, progressive dividends, and the upside opportunity provided by BBOX’s market leading development arm.”

Neil Kirton, chair of Warehouse, added: “The Board is pleased to be recommending the Acquisition, which is not only at a higher level to the previous offer for the Company, but which also provides Warehouse Shareholders with the opportunity to retain both the Warehouse Q4 and Q1 dividends and remain invested in this attractive asset class.

“The strategic rationale for the Acquisition is very clear and having engaged closely with the BBOX team, we are confident in their ability to deliver value from this combination and to generate enhanced earnings and dividends for both BBOX and Warehouse Shareholders. Warehouse Shareholders will further benefit from the increased liquidity that comes from being invested in a larger company, providing them with greater optionality over when to crystalise returns.”