The property fund managed by Abrdn, worth £439 million ($554 million), is set to be dissolved following the rejection of a proposed merger by investors, as stated in a Wednesday announcement by the fund.
Despite efforts to merge with a competitor fund, shareholders did not provide adequate support, leading to this decision.
Listed property funds have faced challenges in recent times, with rising borrowing costs and reduced demand for commercial real estate due to post-pandemic changes, resulting in declining asset values and withdrawals from property-focused funds.
In response to these difficulties, some real estate funds have sought mergers to strengthen their financial positions.
While a majority of shareholders of Abrdn Property Income Trust (API) favored merging with Custodian Property Income REIT (CREI), the proposal did not meet the required 75% support threshold.
Consequently, API’s board plans to initiate a managed wind-down considering the challenges API would face as an independent entity.
API intends to maximize returns for its shareholders during the wind-down process. However, it’s anticipated that asset sales may yield lower returns compared to standard market sales. The wind-down plan is contingent upon approval from API shareholders.
CREI expressed disappointment with the outcome but clarified that the merger wasn’t pivotal to its overall strategy.