Carey Olsen advises on two schemes of arrangement for London-listed REITs
Carey Olsen has seen an increase in public takeover activity in the first half of 2023, as shown by its completion of two takeovers of Guernsey-incorporated real estate investment trusts (REITs) in recent weeks.
Both transactions were conducted by way of a Court-approved scheme of arrangement, as Carey Olsen continues its track record of being instructed on the majority of such transactions in Guernsey.
First, Carey Olsen acted for its long-standing client Industrials REIT Limited, which was listed on the Main Market of the London Stock Exchange and on the Main Board of the Johannesburg Stock Exchange, and which held a portfolio of multi-let industrial property in the UK. The transaction resulted in Industrials REIT being taken private by a newly-formed vehicle owned indirectly by funds advised by Blackstone Inc. with a cash offer which valued Industrials REIT at approximately £511.2 million, representing a premium of more than 40% to the volume weighted average price for the month preceding the offer. The transaction was sanctioned by the Royal Court of Guernsey and completed at the end of June 2023.
In addition, Carey Olsen acted for LondonMetric Property Plc, a FTSE 250 UK REIT, in relation to its all-share offer for CT Property Trust Limited (CTPT) which valued CTPT at approximately £198.6 million, representing a premium of more than 33% to the volume weighted average price for the three months preceding the offer. Prior to the acquisition, CTPT was a Guernsey fund regulated by the Guernsey Financial Services Commission, listed on the Main Market of the London Stock Exchange and holding a portfolio of UK commercial property in industrial, logistics, distribution, retail and office sectors. LondonMetric and CTPT each hold complementary portfolios and the all share offer has resulted in an enlarged combined REIT, and should enable shareholders to benefit from economies of scale, cost efficiencies and more favourable financing arrangements. The transaction was sanctioned by the Royal Court of Guernsey and completed at the beginning of August 2023.
Corporate partner Tony Lane led a team which acted on both transactions, assisted by senior associate James Cooke, and with the Court application and submissions being undertaken by partner Tim Corfield and counsel Tim Bamford. UK counsel for Industrials REIT was Bryan Cave Leighton Paisner, and for LondonMetric was CMS Cameron McKenna Nabarro Olswang.
Tony Lane commented: "The combination of the inflationary environment and higher interest rates has proved challenging for all listed property vehicles, but these two transactions demonstrate that these conditions also create opportunities for buyers able to base a strategy around the long term fundamentals of the underlying portfolio. Whilst these transactions have many similarities, they also take markedly different routes forward, with Industrials REIT being taken private by Blackstone in the belief that its full potential can be best achieved as a private company, whilst CTPT has been combined with another similar listed REIT to take advantage of synergies and improve shareholder earnings."