More than a dozen farewells, one turning point for listed property
By Marcus Phayre-Mudge, fund manager, TR Property Investment Trust
Rarely does a listed property deal break into the public discourse. But the fate of Assura, landlord to hundreds of NHS GP surgeries, even reached the House of Lords via debate1 over whether private equity (PE) firms are the right stewards of critical public infrastructure.
Assura shareholders’ ultimate decision to merge with Primary Health Properties (PHP), after a 10-month bidding war in which it faced down a US PE consortium, was a welcome example of real estate investment trust (REIT) consolidation. Better still, the choice to join a listed peer kept these critical healthcare facilities within a transparent and scaled structure – accessible to everyday investors and subject to market scrutiny.
While Assura itself is a sizeable player with PHP’s final offer valuing it at £1.8 billion, the deal points to a broader reality: across the UK and Europe, many smaller listed property companies are disappearing. Over the past year, the bells tolled for more than a dozen such companies. Some sold off assets as they were wound down by pragmatic boards, returning capital to shareholders after years of persistent discounts. Others were carried off by private equity. Many – like Assura – found a second life, merging into larger public peers.
However they exited, their departure marks a requiem – not for the listed property sector itself, but for a fading strain within it. The vast majority of the 15 transactions in the past 12 months involved companies with market caps under £500 million – making them simply too small to survive. So while the obituaries accumulate, a new theme is emerging: REIT renewal through cost-effective liquidity and scale.
Private equity vs public harmony
PE continues to be a dominant motif shaping the score where public markets have left companies languishing at persistent discounts to asset value. Starwood bought Balanced Commercial Property Trust after years at a discount; Brookfield carved up Tritax EuroBox’s logistics portfolio before SEGRO took the rest; and the determined KKR-led tilt at Assura, though ultimately unsuccessful, further shows the intensity of PE interest in public real estate.
This is part of a broader diminuendo in public markets. HSBC and New Financial research released2 in May found more than 1,000 pan-European companies – worth over $1 trillion – have delisted in the past decade after private takeovers. Yet PE is no villain; it can rattle cages and flush out higher public bids. But the message for listed real estate companies is clear: achieve scale or be silenced.
Scale and its resultant liquidity become even more crucial when we consider that capital allocators are consolidating too, as wealth managers – facing fee pressure, tech disruption, and heavier regulation – stitch themselves into giants. With tens of billions to deploy, these enlarged investment committees demand liquidity. Small REITs, however capable their management, simply do not make the playlist anymore.
While the decision to accept an offer from private equity is sometimes the right one, the tragedy is that when property assets go private, they rarely return – removing specialist, income-generating property from public view and everyday investors’ reach. Therefore, we believe the more enduring compositions lie in public-to-public mergers: deliberate arrangements designed to build scale, simplify governance, and secure cheaper capital.
The Assura–PHP merger is a textbook case. By rejecting cash from private equity and choosing to consolidate within the listed market, shareholders created a happy chorus of transparency, social utility, resilient income, cost efficiency and experienced, specialist management. Anyone with a pension or ISA can own a stake in NHS-backed facilities. This is public real estate at its best.
Farewells with form and purpose
But whatever the style of exit, the past year’s flurry of corporate activity is evidence of boards making forward-looking choices. More directors are realising they must put shareholder interests above their own. In practice this can mean pursuing mergers or wind-downs even when it means losing their own seats. That willingness to set aside self-interest marks a positive shift in governance culture.
External management – where a board contracts an investment manager to run a property company’s assets – became far more common in the post-financial crisis era, when external platforms could launch REITs at speed – taking advantage of the appetite for income in a world of very low interest rates. Our long-held view is that external management only works with the right safeguards. We have argued for three simple pillars:
- Manager fees aligned to market cap, not NAV – because shareholders care about share price, and NAV is a backward-looking measure.
- Lead managers with ‘skin in the game’, taking part of their fee in shares.
- One-year rolling management contracts – to avoid multi-year agreements acting as poison pills that block mergers.
By continuing to examine their management contracts, fee structures, and alignment mechanisms, boards can strengthen their position further – ensuring that future mergers are not blocked by outdated or self-protective arrangements. In doing so, they keep the option open to join forces when it makes strategic and financial sense, rather than waiting for external pressure to force change.
Not mourning, but momentum
Taking a step back, the background music for property has turned distinctly more upbeat. Interest rates have likely peaked; many sub-markets – especially logistics, best-in-class offices, retail warehousing – remain supply-tight; asset values are stabilising; and selective equity raises are returning, while investor appetite for more defensive sectors is picking up as US tech dominance wobbles. Crucially, listed property company balance sheets are healthy.
Yes, this has been a requiem, but not for listed real estate itself. Rather, for the subscale, misaligned REIT of a more forgiving era. In its place, a stronger, more disciplined group is emerging, with the scale, governance, liquidity, and purpose to compete. This is a sector that is tuning its instruments for the next movement – sharper, stronger, and ready to perform.
Capital at risk. TR Property Investment Trust PLC is an investment trust and its Ordinary Shares are traded on the main market of the London Stock Exchange. The Investor Disclosure Document, Key Information Document (KID), latest annual or interim reports and the applicable terms & conditions are available from Columbia Threadneedle Investments at Cannon Place, 78 Cannon Street, London EC4N 6AG, your financial advisor and/or on our website www.columbiathreadneedle.com. Please read the Investor Disclosure Document before taking any investment decision. The information provided in the marketing material does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell or otherwise transact in the Funds. Financial promotions are issued for marketing and information purposes; in the United Kingdom by Columbia Threadneedle Management Limited, on 05/09/25 which is authorised and regulated by the Financial Conduct Authority
