The merger failed to gain sufficient shareholder backing at a general meeting held yesterday.

A total of 60.8% of the Abrdn fund’s shareholders and 61.4% of those from Custodian voted in favour of the merger, but this fell short of the 75% needed to move forward with the merger, according to a stock exchange announcement issued today.

Listed property funds have had a hard couple of years due to a sharp rise in borrowing costs and a drop in commercial real estate values.

Many property income funds were temporarily suspended in 2020 as the Coronavirus pandemic took hold due to uncertainty over valuations in the property market.

API said the board will pursue a managed wind-down as returns from asset sales would likely be marketed as normal.

The wind-down is subject to approval from API shareholders.

James Clifton-Brown, chair of the Abrdn fund, said: “In view of these results and the challenges that API would continue to experience as a standalone company, the board will now take steps to implement a managed wind-down, subject to API Shareholder approval, building upon the work already undertaken by the API board and the company's investment manager and advisers, with the objective of delivering enhanced returns for API shareholders."

Custodian’s chairman David LacLellan said he was disappointed by the failure of the merger which would have given the firm a “jump in scale.”