AEW UK REIT backs away from making Alternative Income REIT bid
AEW UK REIT PLC on Tuesday confirmed that it does not intend to make a firm offer for fellow commercial real estate investor, Alternative Income REIT PLC.
AEW UK shares were down 1.5% at 104.60 pence on Tuesday afternoon in London. Alternative Income shares were down 2.8% at 75.46p.
AEW UK said on March 24 that it was considering an all-share offer for Alternative Income, after the latter confirmed in response to press speculation that it had received the indicative, non-binding proposal.
On Tuesday, ahead of the 1700 BST put-up-or-shut-up deadline, for AEW UK to announce a firm intention to make an offer or not, the company announced its decision.
AEW UK stated that ‘although indicative heads of terms were reached at an early stage of the process, it was established during the course of due diligence that agreement on certain key matters could not be concluded.’
It continued: ‘The board considers this to be regrettable as, subject to valuation of an offer based on agreed net asset values and other terms, a combination of the companies could have served both sets of shareholders’ interests.’
Alternative Income REIT, later that day, said its own board ‘has unanimously determined that it is not in the best interests of AIRE shareholders to seek an extension to the PUSU deadline...consequently, it has terminated all discussions with AEW.’
‘The board is confident in AIRE’s ability as a standalone entity to generate a secure and predictable income return, whilst maintaining capital values, by investing in UK properties, in alternative & specialist sectors,’ commented Alternative Income Chair Simon Bennett. ‘AIRE remains on track to deliver its target annual dividend of no less than 5.6 pence per share for the financial year ending 30 June 2026. All of the rent due covered from the group’s property portfolio for the first quarter of this calendar year has been collected and, subject to the continued collection of rent our dividend will be fully covered.’
Bennett added that for the quarter ended March 31, ‘the portfolio valuation showed a small decline of £50,000 to £103.45 million...The board remains confident that following the refinancing of the company’s debt facilities with HSBC UK Bank PLC in October last year and the certainty as to its financing costs for the next up to seven years, the company is well-positioned for the future, with a portfolio that continues to deliver secure, index-linked income and which has the potential for capital growth as the property market recovers.’
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