AEW UK REIT pulls out of bidding for Alternative Income REIT takeover

(Alliance News) - AEW UK REIT PLC on Wednesday said it will not make a firm offer to buy peer Alternative Income REIT PLC, despite support from the Alternative Income board, citing opposition from rival bidder and Alternative Income shareholder Glenstone REIT PLC.

AEWU is London-based real estate investment trust focused on UK commercial properties, of which it owns 34 in total.

It noted that Glenstone, which has an existing 25.4% stake in Alternative Income and is pursuing its own hostile takeover offer for the remainder, will not support an offer from AEWU.

"Glenstone's support, as AIRE's major shareholder, is fundamental to the orderly implementation of any scheme or offer combining the two companies with AEWU as the successor company," it explained.

"The possible offer, had it been implemented, could have led to the combination of two REITs with aligned portfolios, offering greater portfolio diversification, the benefits of increased scale, a reduction in operating costs and an attractive ongoing dividend per share."

Glenstone is offering 71.4 pence per share in cash, comprising 70.0p in cash plus Alternative Income shareholders' retain entitlement to its 1.4p fourth-quarter dividend.

In July, Alternative Income said an alternative offer from AEW was more attractive, with an implied value of around 77.4p per share.

Alternative Income shares were down 1.8% to 69.01p in London on Wednesday morning. AEWU shares were up 0.2% to 106.00p.

Glenstone on Tuesday said acceptances for its offer has remained unchanged since early August at 27.8%, including its own 25.4% stake and 2.4% held by Glenstone director Adam Smith. This means effectively no other Alternative Income shareholders have accepted the Glenstone offer.

Alternative Income on Wednesday said Glenstone is "seeking control of AIRE without paying an appropriate premium". It noted that its net asset value per share was 83.3p on June 30.

Separately, AEWU reported its own NAV per share was 107.80p on June 30, down 0.5% from 108.38p on March 31. NAV total return for the recent quarter, the company's financial first quarter, was 1.3%, improved from 1.0% in the fourth quarter of financial 2026.

European Public Real Estate Association earnings per share, which shows core operational profit per share, was 1.89p for the first quarter, compared to 1.71 pence in the fourth quarter.

AEWU said performance was not driven by any one particular sector, but rather by gains from managing individual properties.

AEWU previously had declared a 2.00p per share dividend for the first quarter, on track for its targeted annual payout of 8.00p. The company noted that the dividend will be its 43rd quarterly dividend payment in a row.

"We remain confident in the outlook for AEWU's strategy and believe that the portfolio is robustly positioned to continue to achieve the company's investment objective," Portfolio Manager Laura Elkin said, adding:

"We continue to see significant attractive buying opportunities in the UK real estate market and are working with the company's board and advisers to explore routes to raise capital, with a view to taking advantage of these."

By Camilla Borri, Alliance News reporter

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