The real estate sector has emerged as a focal point for UK public mergers and acquisitions (M&A) in recent months, according to Peel Hunt’s Takeover Trends report.

Key activity in this market in recent weeks includes the takeover bid battle between Primary Healthcare Properties (PHP) and KKR for Assura, and between Blackstone and Tritax for Warehouse REIT.

The recent flurry of activity is underpinned by the sustained discounts to net asset value (NAV) many mid-sized, externally managed REITs are trading at, alongside more robust pricing in the direct real estate market.

Across eight sectors, including industrials, buildings and services, Peel Hunt observed a significant increase in competitive bid situations, reaching its highest level in five years.

Peel Hun said this is being driven by depressed UK equity valuations, creating attractive entry points for buyers, while the improving macroeconomic outlook is boosting confidence.

Michael Nicholson, head of advisory and M&A, said: “In H1 2025, US private equity firms have met their match in the form of UK-listed consolidators.

“The benefits of greater scale and more liquidity, while preserving key assets and high-quality businesses in the UK markets, have become increasingly persuasive factors in the deliberations of UK plc boards and investors when contemplating offers.

“The battle between KKR and Primary Health Properties for Assura appears to carry a symbolic significance for the UK market as a whole, not just the highly active REIT sector, which has also seen the board of Warehouse REIT switch its recommendation from a cash bid from Blackstone to a cash and share offer from Tritax Big Box REIT.”

Peel Hunt said well-capitalised private investors such as KKR and Blackstone have sought to offer full cash exits to UK REIT shareholders, typically at a premium to the prevailing share price, but at a discount to NAV.

These transactions can appeal to shareholders and boards that are constrained by low share liquidity and lack the ability to raise growth capital at current share prices, according to the report.

The move to listed consolidation is driven by polarisation in the sector, as higher-rated, larger REITs are able to offer share consideration, Peel Hunt said. This gives shareholders exposure to the real estate market.

Shareholders can also benefit from cost efficiency, greater liquidity and increased relevance within the listed market when REITs scale up via mergers and acquisitions.