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Bid for Industrials REIT (MLI)

The big news of the day is that Industrials REIT (MLI, 162p), which we covered in detail and rated a buy in the November newsletter, has announced an intended cash offer from Blackstone at 168p per share. This has sent the shares up by 37% and signals the value inherent in so many of these deeply-discounted real estate assets in the investment trust sector. Liberum stockbrokers said this morning that Warehouse REIT (WHR, 107p) could be a beneficiary in the same sector, and its shares are ahead by 4.9%.

We think Industrials REIT shareholders should wait for the full details, due within the next couple of weeks. A counter-bid seems highly unlikely, but 168p would represent a reasonable exit at this point, we think. Whether or not we will see more bids in the REIT sector is difficult to judge, but it is a reminder that there is plenty of value to be unlocked, even if that happens more slowly over time as sentiment improves.

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While it's good to see smart companies like Blackrock realizing there is significant value in these real estate values, it means those of us who are long-term investors will not see the value. I will be taken out of my MLI shareholding at a small profit - barely worth the effort of having invested in MLI in the first place.

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