Investment trust insider on abrdn Property Income – James Carthew: Why I bought Abrdn Property for the wind-down
The Abrdn Property Income (API) / Custodian Property Income (CREI) Reit merger is not happening, having gained insufficient support from API shareholders. There is a strong presumption that API will now enter managed wind-down (most articles seem to think that this is a done deal), but this is an idea that the board came up with and would need approval from shareholders.
I now have more of a direct interest in this as I have bought a few shares at 51.5p. The share price moves of CREI and API since the deal was called off strongly suggest that merger arbitrageurs were at work here, trying to eke out a gain by selling CREI shares and using the proceeds to buy API shares, which works if the two share prices do not fully reflect the terms of the proposed merger.
Anyway, with the deal off, the arbs were forced to buy back CREI shares – driving up that share price – and sell API shares, depressing the price to a level where I thought they were too much of a bargain to ignore. I figured that this would be a short-term opportunity, but if I had waited, I could have bought them for even less than I did.
So, what do I own a stake in? The last published net asset value (NAV) for API was just under £300m or 78.4p per share. There will be some expenses related to the abandoned merger to come off that, though hopefully, these will not be too extortionate. The £140m of debt at the year-end equates to a loan-to-value ratio of 30.8%, and the total value of the portfolio was £439m at the end of 2023….
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