Tritax Big Box Reit Share Discussion Threads

[scruff1] 12/2/2024 22:03

Thanks William. Article in citywire tonight. Seems the chair of UKCM is not in favour and the deal has yet to be accepted. Also analysts not convinced of the logic. I think like most posters today they want to see some rationale other than simply bigger is better. William's resume seems to be about the size of it - as usual !

[nickrl] 12/2/2024 21:42

@WC or perhaps Aberdeen boosting Tritax AuM so they offload their holding?

[williamcooper104] 12/2/2024 20:05

It would appear to be keep the industrial - UKCM has more last mile/urban which bbox wants to compliment Also keep the retail warehouses - after all just a shed with a shop front And then sell the rest Hopefully at a bit of a profit to the implied acquisition price (Also for Andrn to reduce costs and charge similar management fees)

[scruff1] 12/2/2024 18:11

Well if there is a clear strategy it appears no one here knows quite what it might be.
Over to William Cooper !!

[llef] 12/2/2024 16:30

AdamB1978, I imagine the main rationale of the deal is that Bbox likes UKCM industrial assets, and believes its getting them cheaper than purchasing similar props in the open market.
UKCM offices+retail+other will comprise about 10% of the combined assets, I'd imagine they could be sold off over a number of years without taking too much of a haircut, or occupying too much of management's time. As they are sold off, the RCF would be reduced.

[igoe104] 12/2/2024 15:21

On a positive note, don't think it will long before they are in the ftse 100 and attract more fund buyers..

[adamb1978] 12/2/2024 15:21

not really llef.

They're issing shares to buy the UKCM assets...which they're then selling to get the cash to do those build out or purchases which you mention

Why not just issue shares and not bother with the UKCM deal? Or better still raising whatever debt it can.

Selling those assets really can't be a rationale of the deal. Its more an impediment given the need to offload them, and buyers will know that BBOX don't want those things. Not exactly the backdrop to get a good price!!

[llef] 12/2/2024 15:15

AdamB1987 re "then selling them doesnt create any value - it just swaps an asset for the equivalent cash amount",

whilst that's true, if BBOX needs cash for financing build out or purchases, doesn't it save BBOX from funding those activities from the revolving credit facility which is charged at a margin of 120bps over SONIA?

[scruff1] 12/2/2024 15:12

Agreed its a weak logic but its the best Ive got - why would BBOX want their retail et al - it doesnt really fit does it? Like someone posted the other day - wouldnt SHED be more logical?

[adamb1978] 12/2/2024 15:04

Not sure I buy the rationale of selling the UKCM non logistics assets. Assuming they're being carried at market value, then selling them doesnt create any value - it just swaps an asset for the equivalent cash amount.

Rationale has to centre around synergies from running the fund

[scruff1] 12/2/2024 14:09

Yep me too. Doesnt instantly grab me as the most obvious fit. Can only think the obvious synergies and possibly the sell off of the UKCM non logistics to fund an increase in the merged co's stock - but even that would seem a tad clumsy. Maybe they will surprise us. Maybe the increased size will attract investor interest - but obviously not today :-)

[speedsgh] 12/2/2024 13:44

"Speaking as just a BBOX holder - I'm totally underwhelmed by this - as it would seem, is the market."

Ditto. Need a more detailed justification to be convinced.

[skinny] 12/2/2024 12:44

Speaking as just a BBOX holder - I'm totally underwhelmed by this - as it would seem, is the market.

[topvest] 12/2/2024 12:25

Yes, its an interesting deal and a tad surprising. Benefits are probably around 1. Selling 40% of UKCMs non-logistics assets; 2. Use additional capital to buy more logistics assets; 3. Reduced costs and 4. For UKCM, eliminate the Phoenix blocking stake. It's a done deal on the UKCM side. I hold both, so am relatively relaxed.

[adamb1978] 12/2/2024 11:53

The logic would need to be predicated on synergies:

- don't need 2 investment teams - perhaps need 1.5 teams but there has to be some synergies there
- remove other opex such as 2 lots of listing fees, NEDs, offices etc
- possibly greater scale helps slightly better financing terms

I'm not sure how much all that comes to on a per share basis

[speedsgh] 12/2/2024 10:46

Fail to see the logic behind this proposal. Look forward to BBOX communicating that in more depth to its shareholders.

UKCM provided its shareholders with an update on Friday last week. That presentation can be seen here -

Q4 portfolio sector weighting by market value (Portfolio Structure at 14m38s) was:

~ Industrial 59%
~ Retail 14%
~ Offices 12%
~ Other 15%

Can only assume that BBOX will be looking to sell on the non-industrial assets.

[adamb1978] 12/2/2024 08:30

Has anyone run the numbers on the financial impact? I wouldnt have thought that the synergies would be huge which limits the premium able to be paid such that the deal remains accretive

[yump] 12/2/2024 08:30

If the yield stays the same for the combined group, the advantage for investors is perhaps a better capital gain, as a result of more fund interest in a larger group than in two smaller ones. Maybe a more secure yield especially if weaker or more volatile rental property is sold.

Although it takes the diversification out of our hands.

[nickrl] 12/2/2024 08:22

Perhaps Picton will come back and put a better offer in for ukcm and spare us!

[nickrl] 10/2/2024 13:26

This is bizarre merger proposition unless Aberdeen are going to slash their fees whats the point? Perhaps they sense logistics is no longer looking so favourable so want something else to bolster the income stream. Also UKCM share price much higher so going to be interesting to see what terms are. However, if correct they must Phoenix support otherwise it won't happen.

[riverman77] 10/2/2024 11:48

EBOX would give them a foothold into Europe if they wanted to move in the Segro direction as a pan European operator.

[skyship] 10/2/2024 11:16

UKCM would be bizarre; but the share price there has been surprisingly strong recently - someone been buying for sure.

BBOX would of course be using its own very strong equity, trading on a mere 12.3% discount and 4.4% yield. However, likely to do a CREI and collapse sharpish on the news.

Agree with Riverman, EBOX would have been a better fit; though of course a pretty major departure into Euroland.

Will it instigate a sector rally; or are those left just too small to be of interest?

[riverman77] 10/2/2024 09:51

An odd choice given UKCM has a load of offices and retail, which presumably they'll want to sell to remain a pure play logistics company. I guess a quick way to increase scale. SHED WHR or even EBOX would have been better choices.