Custodian Property Income REIT’s (CREI’s) board has announced updates to its proposed management arrangements ahead of its potential all-share merger with Abrdn Property Income Trust (API).
At the start of this month, CREI’s board “reaffirmed its conviction” in the merger and said it “remains the optimum outcome for shareholders in both companies”. This followed a rival bid for API from Urban Logistics REIT (ULR).
To improve the attractiveness of the merger to shareholders of both trusts, CREI’s board has agreed with its investment manager, Custodian Capital, to waive its one-off project fee of £350,000, which would have been in place as a result of the merger. It will also waive the £75,000 fee which would have been in place had the merger bid failed.
It has also agreed to remove the extension of Custodian Capital’s appointment “until the conclusion of the transition period”, with the investment manager’s appointment terminable on 12 months’ written notice.
See also: Abrdn Property Income Trust agrees merger with Custodian Property Income Reit
These changes follow previous amendments made ahead of the potential merger in January this year, which included waiving the management fee relating to the net asset value of API for the first nine months after the merger. CREI’s board also confirmed a reduction in management fees paid to Custodian Capital by the board for two years after the proposed merger. This would take place by consolidating the first two fee tiers into one, at a total fee of 0.75% up to a NAV of £500m. This compares to a fee of 0.9%.
CREI’s board said: “These additional amendments to the terms of the amended and restated investment management agreement reinforce the financial rationale of the recommended merger and represents further alignment between CREI, Custodian Capital and the shareholders of the combined group.
“The CREI board has relayed the terms of these agreed further… to the API board which recognises the additional value that this would provide to shareholders of the combined group in the event of the recommended merger proceeding.”
It also “strongly advised” API shareholders “not to take any action with regards to the ULR indicative offer” and to “vote in favour of the scheme” at the API court meeting and API general meeting on the 20 March. Custodian itself will consult shareholders on the deal the day before, on the 19 March.
