Tritax Big Box to buy REIT rival UKCM for £924m

Tritax Big Box has agreed a deal to buy rival UK Commercial Property REIT (UKCM) for £924 million.

The warehouse giant, whose major tenants include Ocado, Amazon and B&Q, said the combination of the two companies will create a property giant valued at £3.9bn, with a £6.3bn property portfolio focused in the logistics sector.

Subject to shareholder approval, the deal will see UKCM shareholders own 23.3 per cent of the combined entity.

UKCM, which is the smaller of the two companies, has a portfolio of investments in shopping centres, office buildings and distribution centres.

The deal will value UKCM at 71.1 pence per share, which Tritax says represents a 10.8 per cent premium to its rival’s share price at the end of trading on Friday.

Commercial property in the UK has taken a hit in recent years as higher interest rates have hit building valuations across a wide range of sectors, including retail and offices.

Tritax told investors the move will “bring together complementary logistics-oriented investment portfolios with a shared focus on resilient and growing revenues.”

The firm added that the deal would “enhance the overall customer offering through a high-quality logistics portfolio across a broader range of property sizes and tenant uses, from ‘Mega-Boxes’ to smaller, strategically located logistics assets.” within key urban locations.”

It is the latest in a series of M&A activity in the REIT sector since 2019.

Last February, it was revealed that a £5bn merger of two of London’s biggest landlords, Capital & Counties Properties and Shaftesbury, would go ahead after gaining the go-ahead from competition regulators.

The Competition and Markets Authority (CMA) investigated the deal over fears the merger could lead to dominance in the West End, which could lead to “a substantial decrease in competition”. It cleared the two companies after a two-month investigation.

The now-Shaftesbury Capital said in November that sales at shops, bars and other tenant-run businesses so far in the second half of the year were up 16 per cent on 2019 levels.

Actions in UKCM rose 5.14 percent to 67.50 pence in the early afternoon on Monday, while tritax stock They were down 2.81 per cent at 155.70 pence.