CMS advises LondonMetric on its recommended all-share merger with LXi REIT

International law firm CMS is advising longstanding client, LondonMetric, on its recommended acquisition by way of a scheme of arrangement of closed-ended real estate investment company, LXi REIT. The boards of directors of LondonMetric and LXi REIT have reached an agreement on the terms of this transformative merger, which is set to create the UK’s leading triple net lease Real Estate Investment Trust (REIT), with a combined portfolio of approximately £6.2 billion.

LondonMetric is a FTSE 250 listed REIT that owns one of the UK's leading listed logistics platforms alongside a grocery-led long income portfolio.

Under the terms of the merger, each LXi REIT shareholder will be entitled to receive 0.55 new LondonMetric shares for each LXi REIT share held. Based on the closing price per LondonMetric share on 15 December 2023, the merger values the entire issued and to be issued ordinary share capital of LXi REIT at approximately £1.9 billion.

In addition to LXi REIT shareholder approvals, the merger constitutes a reverse takeover for LondonMetric for the purposes of the Listing Rules. Accordingly, the merger will be conditional on the approval of LondonMetric’s shareholders.

Following completion of the merger, the Combined Group will own and manage UK property specialising in the logistics, healthcare, convenience, entertainment and leisure sectors.

CMS Corporate and Client Relationship Partner, Kristy Duane, commented: "This is a significant transaction which creates the UK’s leading triple net lease REIT and fourth largest UK REIT. The proposed merger not only ensures the Combined Group's continued growth but also presents an investment proposition finely attuned to the prevailing macroeconomic climate, evolving consumer trends, and dynamic developments in the property market.

“LondonMetric is a longstanding and valued client of the firm. We are delighted to have supported LondonMetric on this transaction, following quickly on from its recent public takeover of CT Property Trust Limited (CTPT). Our work on these transactions reinforces CMS’s position at the forefront of the public M&A market and strong track record advising on complex deals in the listed sector.”

With an EPRA NTA of approximately £4.1 billion, the deal will provide better access to capital and increase share liquidity. The Combined Group will be structured to continue both companies’ long track records of dividend growth, with LondonMetric on track for a ninth consecutive year of dividend progression. 

Gordon Anton, Corporate Partner at CMS, added: "The transaction represents a significant milestone for both companies, delivering significant economies of scale and efficiencies. Following the merger, the Combined Group will be in a stronger position to access new opportunities and deliver enhanced total shareholder returns.”

The CMS team was led by Kristy Duane and Gordon Anton, and included Jack Shepherd, Kieran O’Brien, Jennifer Gray, Jack Richards, Harry Cross, Jennifer Tambe, Hamish Oliver, Lucy Jessop, Magnus Chisholm, Jasmine Kobewka, Phil Anderson and Robert Sartor (Corporate); Sarah Ozanne (Employment); and Russell Hoare and Louisa Mottaz (Competition and FDI). 

The CMS public M&A practice specialises in assisting clients in executing complex transactions within challenging timeframes. Recent transactions include advising Pendragon plc on two competing possible offers (withdrawn) in connection with the £397m sale of its UK motor and leasing business to Lithia Motors Inc; and Finsbury Food Group, a leading manufacturer of bakery goods, on its sale to Frisbee Bidco Limited for £143.4 million.  

CMS is also the leading legal adviser to REITs and advises over 40 UK REITs, including almost half of the UK’s premium listed REITs.