Cristian Angeloni, Investment Week, 20 March 2024:
abrdn Property Income (API) trust has agreed the sale of two of its assets for a total price of £16.5m – a 0.3% discount to the December 2023 valuation.
In a stock exchange filing today (20 March), API said contracts have been exchanged for the sale of 15 Basinghall Street in London, which is expected to be completed on 22 March.
The trust sold the office building for £9.8m, a net initial yield of 8.2% but a 7.1% discount to the September 2023 valuation.
Additionally, the sale of industrial estate Opus 9, Warrington completed at the price of £6.7m, a net initial yield of 5.9% and a 5.5% premium to the September 2023 valuation..
At the same time, shareholders in Custodian Property Income REIT (CREI) overwhelmingly approved the merger between the two trusts yesterday (19 March), with 97.9% of votes cast in favour of the combination..
However, following the double asset sale from API, Richard Williams, property analyst at QuotedData, cast doubts on whether the merger would be the best option for the abrdn trust and its 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.”
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