The board of Warehouse Reit (WHR ) is backing an increased takeover offer from Blackstone, leaving rival Tritax Big Box Reit (BBOX ) out of the running.

Blackstone upped its cash offer to 113.4p per share for the portfolio of multi-let warehouses. Factoring in Warehouse Reit’s fourth interim dividend of 1.6p per share, this means investors will receive 115p per share, valuing the share capital of the real estate investment trust (Reit) at around £489m.

This represents a 3.6% premium to Tritax’s offer on 25 June of 109.5p per share and is a 6p per share increase on Blackstone’s previous offer made on 4 June.

It is also a 39.6% premium to Warehouse’s closing share price of 82.4p on 28 February, which was the last day before the offer period started.

Neil Kirton, chair of Warehouse Reit, said the board had carefully evaluated both offers and had decided to back Blackstone’s all-cash offer instead of Tritax’s bid, which had comprised of a mix of cash and new Tritax shares.

‘The Warehouse independent directors now switch their recommendation in favour of the increased Blackstone offer,’ he said, pointing to the attractions of Blackstone’s ‘certain all-cash offer’.

‘Not a knockout bid’

However, not every shareholder welcomes the deal. Matt Norris, head of real estate securities at Gravis which is an investor in Warehouse Reit and Tritax Big Box, noted that Blackstone’s latest offer still comes at a significant discount to the last reported asset value of 128p.

‘It doesn’t look like a knockout bid,’ he remarked.

He believes shareholders face a dilemma: the certainty of cash from private equity or the potential for long-term value through a merger with Tritax Big Box.

‘The appeal of Blackstone’s offer lies in its simplicity — cash. But certainty is not the same as value.

‘Even at the revised level, the Blackstone offer remains significantly below the company’s last reported EPRA net tangible asset value of 128p per share at the end of March,’ he said.

He also noted that Blackstone is not calling this its final offer, which he hopes is a sign that ‘more may yet be on the table’. 

‘By contrast, the alternative proposal from Tritax Big Box offers more than just cash. It allows shareholders to roll some of their investment into shares, maintaining exposure to a compelling part of the UK commercial property sector,’ he said.

He urges Warehouse’s shareholders to ‘consider not just the price on offer, but what they are being asked to give up’.

Over the past three years, Warehouse Reit’s shares are down 4.5% which compares to a 9.8% loss by Tritax Big Box, its only competitor in the AIC’s UK logistics sector.

Warehouse Reit yields 5.6% and trades on a 9.9% discount.