In medicine, ‘informed consent’ is a key principle: patients must be told not only the treatment on offer, but also the alternatives, risks and long-term consequences, before agreeing to life-changing procedures. Anything less is ethically inadequate.

In UK REIT takeovers, however, shareholders — the ultimate decision-makers — don’t benefit from the equivalent level of detailed analysis. What they typically see are the property-level valuation reports, prepared by RICS-regulated valuers, which set out the market value of the underlying real estate portfolio. These are useful, but only half the story.

The other half lies in the valuation analysis prepared by the investment banks advising the board. These banks, formally designated as financial advisers under the Takeover Code, provide fairness opinions that weigh not just property values but full deal economics. This includes portfolio premiums and valuation multiples, brand value and development pipelines, management platforms and operational synergies, tax advantages and debt attractiveness, and the bidder’s strategic drive.

It is this enterprise-level assessment that guides the board’s recommendation. Shareholders pay millions to bankers for this advice. Yet it is not fully disclosed to them — even though they are the ones asked to decide. And it is an irreversible decision if the business is taken private, much like a patient consenting to major surgery.

This matters because REITs almost never change hands at the simple sum of their property values. A motivated private equity buyer may (at least privately), attach a hefty ‘special value’ premium — not just to scale up a platform quickly or capture marriage value from combining portfolios, but because every deal is likely to drive more capital under management, more investment management fees and more carried interest.

For the private equity acquirer, the motivation isn’t just the property uplift, it’s the opportunity to monetise the acquisition itself. A corporate deal delivers size and scale instantly — speed no piecemeal asset buying can match. These drivers can add tens of millions potential future value generally not captured by property-level valuation reports.

Private equity paid handsome double-digit premiums to acquire Hansteen and Industrials REIT — deals which Gravis supported. Yet the Warehouse REIT board — and, importantly, not unanimously — urges investors to accept a hefty discount. But just as not all medical opinions are identical, not all fairness opinions point to the same underlying value. Some deals deliver rich premiums, others steep discounts, but still the prognosis comes back predictably the same: ‘fair and reasonable’.

The result is a potential asymmetry of information. Directors are given the full diagnosis, while shareholders, who are being asked to sell the business they own, are shown only a handful of corporate valuation metrics and told that the offer is ‘fair and reasonable’. The danger is obvious: investors may be selling out too cheaply, while private equity bidders harvest potential tax advantages, synergies and strategic upside.

It would improve the deal-decision process if investors and analysts had access to the same detailed valuation information as boards, including the assumptions and judgments underpinning the “fair and reasonable” opinions. Only with full disclosure can boards be effectively questioned on the recommendations they make to shareholders.

It is no different from patients reviewing the results of their diagnosis with a consultant before deciding on treatment. That is how informed consent works.

Boards should be more open. Detailed property valuations are disclosed in REITs takeover, so why not the full fairness reports from the investment banks? Shareholders foot the bill, yet never see the assumptions that underpin them. Either boards should open the case notes, or the Takeover Code should force them to.

Deals shouldn’t be served up only through press releases and private meetings. Investors and analysts deserve an open forum where the board sets out its diagnosis and can be questioned on the treatment it recommends.

Takeover Code rules on selective disclosure are no excuse. With webcasts and dial-ins, everyone can attend the consultation. The principle is simple: transparency and open access to the detailed valuation analysis.

If fully informed consent is the standard for medical patients, why not for investors facing the corporate equivalent of surgery? Unless boards disclose the valuation methods and judgments behind fairness opinions, shareholders risk choosing the wrong course of action, potentially selling too cheaply while private equity positions itself for the upside.

Important information

Disclosure: as at 1 September 2025, the TM Gravis UK Listed Property Fund invests in Warehouse REIT.

This article is issued by Gravis Advisory Limited (“GAL” or the “Firm”)), which is authorised and regulated by the Financial Conduct Authority. GAL’s registered office address is 24 Savile Row, London, United Kingdom, W1S 2ES. The company is registered in England and Wales under registration number 09910124.

TM Gravis UK Listed Property (PAIF) Fund (the “Fund”) is a sub-fund of TM Gravis Real Assets ICVC, which is a non-UCITS retail scheme and an umbrella company for the purposes of the OEIC Regulations. The Fund is a Property Authorised Investment Fund (“PAIF”). Thesis Unit Trust Management Limited is the Authorised Corporate Director of TM Gravis Real Assets ICVC and GAL is the investment manager of the Fund.

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