Alternative Income REIT warily considers fresh offer from Glenstone

Alternative Income REIT PLC on Monday said it was considering a sweetened takeover offer from Glenstone REIT PLC, but that the new offer remained below its net asset value at the end of March.

Both AIRE and Glenstone are London-based real estate investment trusts. Glenstone last month announced its firm intention to make a 70 pence per share cash offer for AIRE, which valued the latter at approximately £56.4 million.

AIRE said it had "many reasons" not to recommend the 70p-per-share offer, pointing out that it was 17% lower than AIRE's net asset value per share of 84.4p at March 31, and on Monday Glenstone upped its offer by 2.0% to 71.4p per share, or £57.5 million in total.

Glenstone said the sweetened bid is "final" - it will only consider increasing the offer if another suitor swoops in with a competing bid.

AIRE shares were 0.7% higher at 69.50p on Monday morning in London, giving it a market capitalisation of approximately £56.0 million. The stock is down 6.8% over the past year.

It responded to Glenstone on Wednesday by saying that, after accounting for the payment of dividends, the higher offer still represented "a negligible premium" to its closing price of 69.7p at May 14.

AIRE's target dividend for the year ended June 30 is 5.6p per share, with interim dividends paid so far amounting to 4.2p per share. This means that a fourth quarterly dividend of 1.4p per share would need to be declared in later this month or early in August.

AIRE noted that, under the terms of Glenstone's revised offer, Glenstone intends to reduce the consideration payable, should AIRE declare a dividend. By AIRE's calculations, this means the Glenstone's latest offer "would not have the value of 71.4 pence that they claim, but would only be worth 70.0 pence per share".

The 70.0p-per-share value is at "a negligible premium" of 0.02% to AIRE's three-month volume-weighted average share, AIRE said, and remains 17% below AIRE's net asset value of 84.4p per share at March 31.

"The board is considering the offer document and will publish its response document shortly," AIRE added on Wednesday.

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