FCPT agrees to a merger with UKCPT

TWO of Britain’s property trusts have announced a proposal to merge creating the sixth largest trust of its kind in the UK in a union valued at £1.6bn.

Board members of F&C Commercial Property Trust (FCPT) and UK Commercial Property Trust (UKCPT) have agreed on merger terms that are expected to entice new investors.

The tie-up will be done through a scheme of reconstruction, which will see FCPT absorbed by UKCPT.

FCPT shareholders have the option to receive new UKCPT shares or to elect to receive 91p in cash per share.

Friends Provident and Phoenix Group, which collectively own a 50.3 per cent stake in FCPT have already backed the sale, which cannot go through until it receives independent shareholder support.

But FCPT manager, F&C REIT, said it was “disappointed” by the move upon receiving a six-month notice that will terminate its contract with FCPT.

“We are disappointed to have been served with notice given the continued strong performance of the portfolio under F&C REIT's management,” said a statement from the group.

Analysts said the combined portfolio will give 60.5 per cent weighting to London and the South East, while 51 per cent will be focused on the retail property market, while 36 per cent will focus on offices and 14 per cent will be industrial

FCPT’s John Stephen will assume the role of chairman of the new seven-member board, while UKCPT’s Chris Hill will become deputy chairman.

The new structure will see three FCPT board members transfer over to the newly merged group and will result in the resignation of Keith Dorrian from UKCPT’s board.

Shareholders are expected to vote on the merger proposal in August, with both companies in need of 50 per cent approval.