UK Commercial Property REIT (UKCM) has terminated discussions with Picton Property over a possible merger of the companies.
It was announced on 8 November that discussions between the two parties over an all-share merger on a NAV by NAV basis had commenced after Picton approached UKCM.
Today, UKCM said that its largest shareholder – Phoenix Life, which has a strategic partnership with UKCM’s fund manager abrdn and owns 43.4% of UKCM – does not support the possible merger on the terms proposed.
UKCM has informed Picton that it is terminating discussions. Picton said that it was considering the feedback that it has received from shareholders in Picton and UKCM, and would make a further announcement in due course.
UKCM is the larger of the two companies with net assets of £1.05bn (at 30 September) and a portfolio value of £1.27bn. PCTN has net assets of £537m (at 30 September) and a portfolio value of £757m.
A merger would create a company with net assets of around £1.6bn and a portfolio worth around £2bn.
Both companies have low leverage with UKCM’s gearing of 16.7% and PCTN’s LTV at 28%.
Both companies have diversified portfolios of UK property, with a weighting towards the industrial sector. UKCM’s portfolio is weighted 58.8% to industrial, with 14.2% in retail and 12.2% in office and 14.8% in alternatives (hotel, student accommodation and leisure).
PCTN’s portfolio has a 58.6% weighting to industrial, but has a larger exposure to offices at 30.7%. Retail and leisure makes up 10.7% of the portfolio.
UKCM : PCTN : UK Commercial Property REIT and Picton merger talks off