Sussex Bidco LP, a newly-formed limited partnership indirectly owned by investment funds advised by affiliates of Blackstone, has agreed to acquire UK-listed commercial property company Industrials REIT for £511 million, excluding debt.
Under the terms of the acquisition, Industrials REIT shareholders will be entitled to receive 168 pence in cash for each Industrials REIT share.
This represents a premium of 42.4% to the closing price of 118.0 pence on 31 March 2023; and 40.6% to the Industrials REIT one-month volume weighted average share price of 119.5 pence on 31 March 2023.
The acquisition values the entire issued and to be issued ordinary share capital of Industrials REIT at approximately £511,196,472 on a fully diluted basis.
Including debt and liabilities, the value of the deal comes to £700 million.
Industrials is a UK REIT investing in multi-let industrial (MLI) properties with the strategic goal of becoming the leading MLI business in the UK.
Established in 2012 and headquartered in London, Industrials has a primary listing on the premium listing segment of the FCA’s Official List and is admitted to trading on the premium segment of the London Stock Exchange’s Main Market for listed securities. Industrials also has a secondary listing on the Johannesburg Stock Exchange.
Industrials specialises in the ownership and operation of MLI estates across the UK, leasing the estates to a diversified range of small and medium-sized businesses. In 2018 Industrials converted to a UK REIT and announced a transition phase to become a 100 per cent. focused UK MLI REIT. This transition completed on 5 April 2023 following the disposal of Industrials’ interest in the joint venture in care homes located in Germany.
As of 31 March 2023 (being the last business day prior to the commencement of the offer period), Industrials had a market capitalisation of £350,295,328.
Commenting on the acquisition, Richard Grant, the Chair of Industrials, said: “Over the past few years Industrials has successfully pivoted its business to focus on the UK MLI segment. Strong occupier demand has continued to drive substantial rental uplifts across our portfolio and our assets remain highly affordable and continue to attract an increasingly diverse range of businesses. Despite our strong financial position and focused strategy, the Company’s access to capital and ability to deliver shareholder value is naturally subject to external factors, many of which are outside of our control.
”The Board has therefore been able to evaluate today’s recommendation from a position of strength. Mindful of the growth opportunity in the industrial real estate sector, initial approaches were rejected. However, following careful consideration and reflecting on the uncertain macro-economic backdrop, we believe this offer is in the best interests of Industrials shareholders providing them with cash certainty at an attractive premium to the pre-offer share price and significantly accelerating the value that could be realised by Industrials if it were to remain listed. Additionally, the Board is reassured by Blackstone’s views and approach to investing in the business and supporting our people.”
Commenting on the acquisition, James Seppala, Head of Blackstone Real Estate Europe, said: “As one of the largest investors in logistics real estate globally and in the UK, we have been preparing for this cycle for a long time and have assembled a high-quality portfolio and positioned it for growth. We have the track record, capital and scale to enable Industrials to capitalise on the opportunities ahead.
”Blackstone has been an active investor in the UK for over 20 years and we have deployed over $27 billion in the country over that period, supporting nearly 90 businesses. This acquisition sees us doubling down on the logistics sector and the UK which is our largest logistics market in Europe.”
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