AEW UK REIT plc

(“AEWU”, the “Company” or the “Group”)

Possible Offer for Alternative Income REIT plc

Introduction

The Board of Directors of AEWU (the “Board of AEWU“) confirms that it is considering a possible all-share offer to acquire the entire issued share capital of Alternative Income REIT plc (“AIRE“) (the “Possible Offer“).

The Possible Offer could lead to the combination of two REITs with aligned portfolios, offering greater portfolio diversification, the benefits of increased scale, a reduction in operating costs and an attractive ongoing dividend per share, with AEWU currently paying an annual dividend of 8 pence. The Possible Offer would be expected to be earnings accretive for AEWU.

Terms of the Possible Offer

Under the terms of a Possible Offer, AIRE shareholders would receive:

0.725 shares in AEWU for each AIRE share held

This is based on an exchange ratio calculated using the companies’ respective net asset values (“NAVs“) per share, with a discount applied to AIRE’s NAV per share of 6 per cent.

The NAVs per share referred to above have been adjusted for the companies’ respective estimated transaction costs and for the most recently declared (but not accrued) dividend per share (as described in the sources and bases section).

Background to and rationale for the Possible Offer

Achieving an appropriate scale for AEWU’s strategy is a key ongoing priority for the Board, with expected benefits to shareholders from growth including enhanced liquidity in the Company’s shares, a lower operating cost ratio as well as an expanded portfolio of investment opportunities. These factors are considered important to ensure that the Company and its strategy remain relevant at a time of much corporate activity and competition in the UK-listed property sector.

The Board and the Company’s investment manager, AEW UK Investment Management LLP, will seek to take advantage of appropriate growth opportunities for the Company where possible, including the potential issuance of new equity. The protection of existing shareholders’ interests, including in earnings potential, will remain paramount in anything examined or proposed.

With the above principles in mind, the Board and its advisers entered into discussions regarding a possible offer for AIRE earlier this year, having been invited to put forward a proposal by the Board of AIRE.  On 24 March 2026, following press speculation, the Company made an announcement to confirm that it was considering a possible offer for AIRE. At the time, an in-principle agreement of terms had been reached with the Board of AIRE for an all-share offer by way of a scheme of arrangement. Unfortunately, certain key information was not available, and agreement on other matters could not be concluded within the required timescales for making an offer. Additionally, access to AIRE’s major shareholder was not granted to obtain their views, which would have been paramount (at the time) to proceeding with the possible offer. As a result, AEWU made a statement that it did not intend to make an offer on 21 April 2026, the deadline by which it was required to confirm a firm intention to make an offer under the City Code.

It was of regret to the Board of AEWU that this opportunity was not able to progress at that time. AIRE’s portfolio is consistent with the assets and management style applied within AEWU. In particular, AIRE’s assets’ inflation-linked income stream was felt to be very complementary to the strong rental growth prospects offered by the portfolio of AEWU and the possible combination of the companies could have served both sets of shareholders’ interests.

Subsequent events

On 12 June 2026 Glenstone REIT plc, which holds 24.78 per cent. of the issued share capital of AIRE, announced a firm intention to make a cash offer for the issued share capital of AIRE that it does not already own.  This announcement released AEWU from its restrictions under the City Code to make another approach to AIRE. The offer made by Glenstone, were it to be successful, removes the possibility of AIRE shareholders receiving further dividend income and is being made at a discount to the prevailing net asset value of AIRE of 15.4 per cent., which, in the opinion of the Board of AEWU and its advisers, compares unfavourably with the proposal made by AEWU some months ago. 

The Company notes the recent statements by Glenstone of their previous support for the possible all-share offer for AIRE by AEWU and their agreement in principle to provide an irrevocable undertaking to vote in favour or accept AEWU’s proposal, based on the terms agreed at that time. However, this was not communicated directly to AEWU at the time nor any other conditions of provision of their support that might have been requested.