A series of mergers could make the UK\u2019s listed property companies a more investible proposition and help them compete on the global stage, according to wealth manager RBC Brewin Dolphin.<\/p>\n\n\n\n
Tritax Big Box has agreed a merger with UK Commercial Property, creating the UK\u2019s fourth largest real estate investment trust (REIT)\u00b9.<\/p>\n\n\n\n
The news followed two major deals in January, with LondonMetric agreeing a \u00a31.9 billion all-share merger to take over LXi and an all-share merger between Abrdn Property Income Trust with its larger peer Custodian Property Income REIT.<\/p>\n\n\n\n
Analysts expect the mergers to be followed by others throughout the year, as more REITs and property companies adapt to higher interest rates and reassess their portfolios amid huge changes in the way property is used. Greater scale has also become more important for securing cheaper borrowing costs and widening the pool of potential investors.<\/p>\n\n\n\n
Compared with international peers, the UK\u2019s REITs are relatively small with a combined market cap of \u00a342.8 billion\u00b2. Brookfield, one of the largest US-listed property asset managers, is valued at \u00a352 billion alone\u00b3.<\/p>\n\n\n\n
The mergers follow the closure of open-ended property funds last year. In October M&G announced it would wind down its M&G Property Portfolio, taking the assets under management held by these types of funds to just \u00a33 billion \u2013 a considerable fall from a peak of \u00a320.5 billion&4<\/sup>.<\/p>\n\n\n\n John Moore, senior investment manager at RBC Brewin Dolphin, said<\/strong>: \u201cAt their current scale, the UK\u2019s REITs are limited by their size \u2013 this has an effect on the capital they can attract, the terms on which they can borrow, and ultimately the deals they can do. Combine them all and you have just one of the main North American property asset managers \u2013 they simply can\u2019t compete on a global scale.<\/p>\n\n\n\n \u201cThere is a unique opportunity to invest in property, where the managers are taking self-help measures to reflect the amount of change in the sector. The closure of open-ended funds only adds to that and puts REITs in an even more interesting position. However, to take advantage of these trends, some REITs are having to raise substantial sums privately, which restricts them and means they can only invest \u00a31 billion when, really, they should be talking about multiples of that figure.<\/p>\n\n\n\n \u201cLondonMetric understands that and is trying to build scale so it can make the most of the period we are going through by buying cheap assets, building its portfolio, getting access to cheaper debt, delivering returns, then going back to step one and doing it all again, only bigger. Property is increasingly a scale business \u2013 the larger players will likely be the winners of the next few years.<\/p>\n\n\n\n \u201cThe LondonMetric-LXi deal puts pressure on the entire sector \u2013 two mergers have followed and more could be on the way. It is the start of something, and we should soon see more activity in the sector. A professional adviser will be able to guide you through these changes and structure a portfolio to take advantage of them.\u201d<\/p>\n\n\n\n Segro \u2013 John said<\/strong>: \u201cSegro is a specialist property company that has built upon its Slough-based warehousing roots to develop into a leading international warehousing, distribution centre, and data centre business. Segro has exposure to growing areas of the economy, led by technology and fast-moving retail and has a strong balance sheet to fund its future potential.\u201d<\/p>\n\n\n\n LondonMetric \u2013 John said<\/strong>: \u201cWith the deal for LXi, LondonMetric is challenging the \u2018old guard\u2019 in the UK\u2019s property industry \u2013 namely Land Securities and British Land. It is now in a position to become the flagship property company, underpinned by a modern, balance portfolio of assets, positioned to benefit from the changes the sector is currently going through.\u201d<\/p>\n\n\n\n TR Property<\/strong> \u2013 John said<\/strong>: \u201cTR Property is a popular investment trust that offers broad exposure to a range of real estate assets. It owns property directly, but also holds shares in REITs from across the UK and Europe and can be flexible between opportunities in either segment. Large UK property developers such as Land Securities are among its top holdings, alongside the likes of Kl\u00e9pierre, which is the second largest shopping mall operator on the continent.\u201d<\/p>\n\n\n\n iShares UK Property<\/strong> \u2013 John said:<\/strong> \u201cIf you want quick, cheap, and straightforward exposure to the UK property market, the iShares UK Property ETF could be an option. It tracks the performance of the UK\u2019s property companies, including Segro, Land Securities, British Land, and Tritax Big Box REIT. There are further passive options offering a more global view of property exposure too.\u201d<\/p>\n\n\n\n Disclaimers<\/strong><\/p>\n\n\n\n The value of investments, and any income from them, can fall and you may get back less than you invested. Neither simulated nor actual past performance are reliable indicators of future performance. Performance is quoted before charges which will reduce illustrated performance. Investment values may increase or decrease as a result of currency fluctuations. Information is provided only as an example and is not a recommendation to pursue a particular strategy. We or a connected person may have positions in or options on the securities mentioned herein or may buy, sell or offer to make a purchase or sale of such securities from time to time. For further information, please refer to our conflicts policy which is available on request or can be accessed via our website at www.brewin.co.uk<\/a>. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.<\/p>\n\n\n\n RBC Brewin Dolphin is a trading name of Brewin Dolphin Limited. Brewin Dolphin Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register reference number 124444) and regulated in Jersey by the Financial Services Commission. Registered Office: 12 Smithfield Street, London, EC1A 9BD. Registered in England and Wales company number: 2135876. VAT number: GB 690 8994 69.<\/p>\n\n\n\n – ENDS –<\/strong><\/p>\n\n\n\n PRESS INFORMATION<\/strong><\/p>\n\n\n\n For further information, please contact:<\/p>\n\n\n\n Peter McFarlane peter.mcfarlane@framecreates.co.uk<\/a> \/ 07412 739 093<\/p>\n\n\n\n Richard Janes richard.janes@brewin.co.uk<\/a> \/ Tel: +44 (0) 20 3201 3343<\/p>\n\n\n\n NOTES TO EDITORS<\/strong><\/p>\n\n\n\n About RBC Brewin Dolphin<\/strong><\/p>\n\n\n\n RBC Brewin Dolphin<\/a> is one of the UK and Ireland\u2019s leading wealth managers and traces its origins back to 1762. With \u00a351.8* billion in assets under management, we offer award-winning, personalised wealth management services from bespoke, discretionary investment management to retirement planning and tax-efficient investing.<\/p>\n\n\n\n Our qualified investment managers and financial planners are based in 33 offices across the UK, Jersey and Republic of Ireland. They are committed to the most exacting standards of client service, with long-term thinking and absolute focus on our clients’ needs at the core.<\/p>\n\n\n\n As part of Royal Bank of Canada<\/a> (RBC), we are now able to draw on the strength of a global financial institution to continue to improve the service we provide to our clients and drive further innovation across our business.<\/p>\n\n\n\n *as at 31st<\/sup> October 2023.<\/p>\n\n\n\n About RBC<\/strong><\/p>\n\n\n\n Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 94,000+ employees who leverage their imaginations and insights to bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada\u2019s biggest bank and one of the largest in the world, based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our more than 17 million clients in Canada, the U.S. and 27 other countries. Learn more at rbc.com<\/a>.<\/p>\n\n\n\n We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities. See how at rbc.com\/community-social-impact<\/a>.<\/p>\n\n\n\n A series of mergers could make the UK\u2019s listed property companies a more investible proposition and help them compete on the global stage, according to wealth manager RBC Brewin Dolphin. Tritax Big Box has agreed a merger with UK Commercial Property, creating the UK\u2019s fourth largest real estate investment trust (REIT)\u00b9. The news followed two […]<\/p>\n","protected":false},"author":18,"featured_media":0,"template":"","meta":{"_acf_changed":false,"rbc_url_alias":"","footnotes":""},"tags":[],"rbcwm_news_category":[],"class_list":["post-16146","rbcwm_news","type-rbcwm_news","status-publish","hentry"],"acf":[],"yoast_head":"\n\n
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