The wave of consolidation sweeping the REIT (real estate investment trust) sector continues apace. Three weeks after issuing a public approach, Glenstone REIT has made a £56.3 million all-cash offer for Alternative Income REIT (LON:AIRE).
AIRE’s largest shareholder has sweetened its offer from the 66.5p the board rejected in November to 70p.
However, the improved offer is a mere 0.4% above AIRE’s ‘undisturbed’ share price of 69.7p on 14 May. It also sits 17% below AIRE’s net asset value (NAV) as of 31 March. The bid also looks miserly in comparison to the 3% NAV discount AEW UK REIT (LON:AEWU) recently offered for AIRE. That potential deal ultimately fell through.
Who is Glenstone?
A REIT listed on Guernsey’s International Stock Exchange (TISE), Glenstone is a long-standing AIRE shareholder with a 24% stake. But Glenstone director Adam Smith, who sits on AIRE’s board, also holds 2.4%. That gives Glenstone a total stake of 26.4%.
Glenstone has also received a written indication of support from Hawksmoor Investment Management, which has a 6.2% stake in AIRE.
‘In the light of AIRE’s performance and failure to grow since its IPO in 2017, Glenstone is disappointed that a transaction capable of delivering an exit for shareholders has yet to be achieved,’ said Glenstone.
Glenstone also pointed out many other subscale REITs have consolidated with larger REITs or been taken private. Given the ‘apparent lack of any viable alternative liquidity opportunity for its investment, Glenstone would now like to have a more direct role in the management of AIRE and its assets.’
What are the analysts saying?
‘This appears to be a hostile takeover offer,’ said Winterflood’s Emma Bird. She noted the AIRE board has yet to comment on this formal proposal, having previously not granted Glenstone due diligence access.
‘The offer price represents a 17% discount to the 31 March 2026 NAV per share, which is wider than the discount of 3% under AEWU’s potential proposal, which the AIRE board believed was fair value but which ultimately did not proceed.
‘Nevertheless, it provides shareholders with a clear exit opportunity from a small and illiquid vehicle, which may be appealing to some investors even at this discount to NAV.’
QuotedData’s James Carthew commented: ‘Glenstone REIT has made its opening offer for Alternative Income REIT and it looks a bit mean, coming at a 17% discount to a NAV that has been edging up recently. The question is, will anyone else step into the fray?’
Read the press release here: https://www.londonstockexchange.com/news-article/market-news/cash-offer-for-alternative-income-reit-plc/17636124
