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UK REIT All-Share Merger Announced

REAL ESTATE SECTOR
LXI Reit (LXI LN) and LondonMetric (LMP LN) are merging in all-share deal.

  1. LMP (mkt cap: c.GBP2.0bn) is to issue 0.55 new shares for each of LXI (c.GBP1.7bn). Being an all-share deal this has no immediate and direct credit connotations plus neither are well-traded credit names.
  2. More importantly, indicative of some shake-out in the REITs sector. The equity index FAREITS Index has had two terrible years (down >30%) but recent rate expectation moves have driven a 25% bounce since Oct-23.
There are some major credit names in that index (e.g Segro, Land Sec, British Land) which have all shown broad tightening in OASs over the last month. BLND is the least liquid issuer but still shows similar patterns (see image). Sector restructuring after such a torrid period may be an interesting catalyst.


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