LONDON: LondonMetric Property plc and LXi REIT plc, two UK-based real estate investment trusts (REITs), have confirmed that they are exploring a possible all-share merger that would create a £6.4 billion property giant.

The two companies issued a joint statement on Monday, following recent media reports, saying that they are in discussions about a deal that would see LondonMetric acquire all the shares of LXi.

The statement said that the possible merger is subject to several conditions, including mutual due diligence, lender approvals and the recommendation of LXi’s board to its shareholders.

The companies said that they see the benefits of combining their complementary strategies and portfolios, which are focused on delivering long-term income and shareholder returns from sectors that are supported by structural trends, such as logistics, healthcare, convenience, entertainment and leisure.

The possible merger would create a UK-focused triple net lease REIT of scale, with a market capitalisation of about £3.9 billion, which is expected to improve share liquidity and access to capital. It would also result in an internally managed REIT with operational efficiencies and sustainable earnings and dividend growth.

The statement cautioned that there is no certainty that a firm offer will be made or what the terms of such an offer would be. It said that a further announcement will be made in due course.

ElectraMeccanica continues merger talks with electric businesses: Susan Docherty

GCP infrastructure announces GABI combination, potential merger with RM Infrastructure Income

Exploring Mergers and Acquisitions: Strategies and Pitfalls in Corporate Finance