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Warehouse investment giants merge

12 February 2024

Tritax Big Box and UK Commercial Property REIT two of the larger industrial and logistics investment companies in the UK have announced their intention to merge to create the fourth largest UK REIT based on a market capitalisation of c.£3.9 billion. But what is in it for their tenants and future occupiers looking at space owned by the new mega investor?

By Liza Helps Property Editor Logistics Matters

ACCORDING TO the regulatory financial statement released on the London Stockmarket today, should the £934 million deal go through, the strategic rationale would see the enhancement ‘of the overall customer offering through a high-quality logistics portfolio across a broader range of property sizes and tenant uses, from "Mega-Boxes" to smaller, strategically located, logistics assets within key urban locations’ – basically a wider offering of warehouse size and locational options from one landlord with the advantage of increased client services and more collaborative interactions  allowing tenants to flex space requirements on a national basis.

In addition, the new mega investor would actively seek to ‘provide additional scope for asset management and capital recycling to enable the Combined Group's specialist management team to capitalise further on new and existing investment and development opportunities’ – basically build and upgrade more space from within the portfolio of land and warehouses already owned without having to physically buy more land to do so.

That is not to say that the new vehicle would not buy land quite the opposite – now it is of size it will be able to leverage its financial muscle and secure funding on quite possibly more preferable returns than previously as individual  companies.

Will all that new modern/ upgraded space be at a discount for existing tenants and new occupiers – probably not as supply of logistics space in the UK remains tight but it will be competitive as the new kid on the block goes up against the likes of SEGRO the single largest UK REIT by capitalisation in the UK as well as foreign owned/listed developer investors such as GLP, Blackstone and Prologis.

 
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