LondonMetric Property (LMP) has made a bid for Urban Logistics (SHED ), which has come under fire from activist trust Achilles (AIC ) in recent weeks.

Urban Logistics, the around £750m portfolio of UK industrial and logistics properties, confirmed on Friday that it had received a ‘preliminary indicative proposal’ from LondonMetric, which has put forward a cash and share offer for the entire portfolio.

The board of Urban Logistics, which specialises in last-mile distribution warehouses, is currently reviewing the offer, although the price has not been revealed.

Shares in Urban Logistics rose 3.7% on Friday, after the real estate investment trust (Reit) publicly acknowledged ‘press speculation’ on a bid, and are up 12.4% over the past week amid a broader market rebound. 

LondonMetric, which is run by chief executive Andrew Jones, said in its own statement late on Friday that shareholders in Urban Logistics would benefit from ‘superior scale’ and enjoy exposure to a ‘larger, more diverse portfolio focused on structurally supported sectors and assets that enjoy high barriers to entry’.

The property investor also flagged the ‘strong income characteristics’ of its fully occupied portfolio, including a ‘sector-leading weighted unexpired lease term of 19 years’ and ‘high-quality occupier covenants’. It added that it has access to cheaper financing and an efficient cost structure.

LondonMetric also made mention of its internal management structure versus Urban Logistics’ external management company, Logistics Asset Management, which has drawn the attention of activist Achilles in recent weeks.

Newly-formed trust Achilles – which was launched by Chris Mills and Robert Naylor, the team that spearheaded a successful exit for Hipgnosis Songs investors – has already taken Urban Logistics to task over what it believes is a conflict of interest regarding manager Richard Moffitt.

Moffitt is not only the chief executive of Logistics Asset Management but also a partner in M1 Agency, which offers specialist advice and services to logistics investors, and has been employed by the trust.

Urban Logistics has said that the £6.3m of fees paid to M1 Agency over the four years to 31 March 2024 were appropriate and compliant.

Recent years have seen LondonMetric ramp up the acquisitions that have propelled it into the FTSE 100. Earlier this month it acquired Highcroft Reit for £43.8m, building on last year’s £1.9bn acquisition of LXI Reit plus the previous takeover of the £198m CT Property trust from Columbia Threadneedle.

John Cahill, analyst at Stifel, said taking out Urban Logistics would be the ‘latest in an increasingly long line of takeovers by LondonMetric’.

Although pricing has not been disclosed, Urban Logistics currently trades at an 18% discount meaning there is ‘scope for LondonMetric to acquire the company at a discount, helped in no small measure by recent pressure on Urban Logistics to modify its management structure’.

Cahill added that LondonMetric would have ‘no difficulty executing its tried-and-tested takeover model: acquire at a discount, eliminate all legacy corporate costs, immediately fold in core assets, rapidly sell non-core at book value, [and] distribute earnings accretion to shareholders via an increased dividend’.