LondonMetric Property is set to acquire London-based real estate investment trust (REIT) LXi for £1.9bn.

The British property firm said that as part of the deal, each LXi shareholder will get 0.55 new LondonMetric shares for every share held, representing a premium of around 9% to LXi’s closing price before the offer period began in December.

LondonMetric, which is also a REIT, mainly owns logistics platforms, alongside a grocery-led long-income portfolio, whilst LXi invests in a variety of sectors, including budget hotels, food stores, healthcare, industrial, pubs and education.

Chief executive at LondonMetric, Andrew Jones, said: "This is a compelling transaction which creates the UK's leading triple net lease REIT and underscores our ambitions to leverage our management platform and access exciting new opportunities across the UK real estate market.

"The deal gives us access to a very well let triple net portfolio of key operating assets and brings together two highly complementary investment approaches that embrace the qualities of income compounding. The combined £6.2bn portfolio will have no legacy assets, full occupancy, high occupier contentment and exceptional income longevity with a high certainty of growth - both organically and contractually."

Reuters has reported that directors at LXi intend to recommend that shareholders vote in favour of the deal, which is aimed at creating a new REIT focused on greater scale and sectors with high barriers to entry.

Following the close of the deal, existing LondonMetric shareholders will hold approximately 54% of the firm, with LXi shareholders holding the remaining 46%.

Chairman at LXi, Cyrus Ardalan, added: "The merger with LondonMetric will build on the strengths and track records of both LXi and LondonMetric. It will create the UK's leading triple net lease REIT with an enlarged and more diversified portfolio aligned to structurally supported sectors, a robust and predominantly unsecured capital structure, broader appeal to investors and enhanced share liquidity, and a highly regarded internal management team.

"The merger will position the combined group for continued growth and outperformance and the delivery of reliable, sustainable and progressive dividends through the cycle, thereby underpinning superior total shareholder returns."

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