The boards of UK REITs need to do more to ensure shareholders continue to receive income during the takeover process, according to fund manager Gravis Capital.

The fund manager said shareholders are also increasingly “footing the bill” for takeover delays without receiving the income their capital continues to generate.

Gravis Capital is calling on REIT boards to demand bidders make firm offers sooner, negotiate income-sharing provisions during offer periods, and ensure shareholders receive dividends while their capital is at risk.

Buyers are benefitting from REIT assets’ rental income during protracted negotiation periods while shareholders, who still bear all the market risk, see none of the reward, Gravis Capital said.

Matthew Norris, Gravis fund manager and managing director of real estate securities, said: “Time is money, especially in real estate, where every day a property earns rent. Yet during the takeover process that can be drawn-out over months in some cases, private equity bidders benefit from that income while shareholders are left waiting, unrewarded.”

Norris added: “If the buyer wants the income, they should step up, take the risk, and make a binding offer. Otherwise, the income rightly belongs to the shareholders whose capital is still exposed.”

UK REITs currently in a takeover process include Warehouse REIT, now in its third month of a takeover by Blackstone, and Assura, which has just postponed a vote on a takeover bid by KKR and Stonepeak to consider a rival offer from PHP.

Assura and Warehouse REIT have become targets for private capital attracted by reliable, growing income streams and assets in resilient sectors like healthcare, logistics, and rental housing.

However, these are the very assets that make extended timelines so lucrative for buyers, not shareholders, Gravis Capital warned.

Takeover activity is intensifying among REITs as they trade at wide discounts to net asset value (NAV).

By merging or by being taken private, REITs can increase scale, gain greater share liquidity, combine balance sheets and access alternative forms of debt finance.