James Baxter-Derrington, Investment Week, 21 March 2024:
The board of abrdn Property Income (API) has reiterated its unanimous recommendation of the proposed all-share merger with Custodian Property Income REIT (CREI), arguing net asset disposals conducted in a managed wind-down would achieve lower prices than a selective portfolio sale post-merger.
In a regulatory filing today (21 March), the board argued the merger, which has been approved by a majority of CREI shareholders, remains the “best outcome”, offering a “premium to the undisturbed share price, an immediate 7.3% uplift in annualised dividends that are fully covered, superior growth prospects and greater scale and liquidity”.
Despite yesterday’s (20 March) announcement revealing the sale of two API properties, the board today argued it expected net disposal values achieved in a managed wind-down would be lower than those available to “carefully selected individual assets”, such as those sold to reduce floating rate debt.
Following those sales, QuotedData property analyst Richard Williams argued the merger no longer represented the best option for shareholders.
He said the two sales “make it hard to get behind a case” for voting in favour of the merger with CREI at the current price, “when these sales prove that a managed wind-down would be of far greater value – even before the positive impact of any potential drop in interest rates this year and into 2025”.
Williams continued: “We have been long-time admirers of API and its manager Jason Baggaley and believe it would be a shame for it to wind down, but it appears that this is the best course versus a merger with CREI.
“As things stand, a managed wind down that delivered NAV less than 0.3% would put almost 38% more in investors’ pockets than the CREI bid. We believe it would take around two years to sell its portfolio – hopefully into an improving investment market.”
Read more here