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.
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.