Two listed property income trusts are in £1.6bn merger talks.

Ignis Investment Services, the investment manager of the £960m UK Commercial Property Trust has proposed merging the trust with the £640m F&C Commercial Property Trust, which is managed by F&C REIT.

The majority shareholders of both funds, Phoenix Group and Friends Provident respectively, are supporting the merger.

In conjunction with the proposal Phoenix has agreed to buy 16.15% of F&C Commercial Property Trust’s shares from Friends Provident.

The enlarged company, which would manage £1.67bn of properties, would be managed by Ignis.

F&C Commercial Property Trust’s biggest asset is the St Christopher’s Place estate near London’s Bond Street, which accounts for 16% of its portfolio.

UK Commercial Property Trust’s two largest assets are Junction 27 Retail Park in Leeds, which it bought last month from Henderson Global Investors for £56.6m, and Great Lodge Retail Park in Tunbridge Wells.