Columbia Threadneedle property trust bought out for £673m despite management complaints

Columbia Threadneedle-run Balanced Commercial Property Trust has reached a deal to be sold for £673.5m, despite objections from its investment manager.

The trust has been managed by Columbia Threadneedle since it was created in 2005, and began a strategic review this April after shareholders told it there was “need for change from the status quo”.

Balanced Commercial Property Trust also confirmed in June that it had received several offers from third parties to buy up its portfolio.

Shareholders will receive 96 pence per share from private investment firm Starwood Capital, compared to the trust’s current share price of 85.5 pence, in a deal recommended by the board unanimously to shareholders.

However, Columbia Threadneedle spokesperson told City A.M. that the manager was “disappointed” by the board’s decision to recommend the offer, as “we believe there remains considerable upside to the portfolio of assets, particularly at this point in the market cycle”.

Over the last few months, the trust has made several strategic asset sales, tilting the portfolio towards the industrial and retail warehousing sector, which now account for half of the portfolio.

The commercial property market in the UK has been challenged over the past few years, as it has recovered from the impact of the pandemic on changing occupational habits, along with rising interest rates.

Columbia Threadneedle were eager to stress that the trust had outperformed other property investments, with its share price rising 33 per cent over the last year.

However, 25.8 per cent of shareholders, including Aviva and Asset Value Investors, have already agreed to the deal, and shareholder discontent that led to the strategic review is likely to push more towards supporting it.

The Columbia Threadneedle spokesperson said: “We have continually repositioned the portfolio through market cycles towards high quality assets which we believe represent excellent value creation opportunities. In our view the current portfolio is well positioned to take advantage of an improving market environment, with lower interest rates, pricing stability and improving sentiment.”

“This value, along with the reduction in the discount over the past year from over 40 per cent to under 20 per cent, is recognised in the offer that has been received by the BCPT board,” the spokesperson added.