Proposed transaction

RNS Number : 8781S

Ediston Property Inv Comp PLC

06 October 2017

 

RIS ANNOUNCEMENT

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES, OR INTO OR FROM CANADA, AUSTRALIA, JAPAN, NEW ZEALAND AND THE REPUBLIC OF SOUTH AFRICA.

This announcement is an advertisement and not a prospectus. This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in Ediston Property Investment Company PLC (the "Company") or securities in any other entity, in any jurisdiction, including the United States, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities. Any investment decision must be made exclusively on the basis of the final prospectus published by the Company and any supplement thereto.

6 October 2017

EDISTON PROPERTY INVESTMENT COMPANY PLC (the "Company")

Further to the statements made in the Company's interim and annual reports regarding growing the Company, the Board is pleased to announce that the Company and its investment manager, Ediston Properties Limited ("Ediston" or the "Manager"), are in discussions to acquire a portfolio of retail warehouse parks (the "Portfolio") with an aggregate value of approximately £146 million (the "Acquisition").  The Company has agreed heads of terms and entered into an exclusivity period in respect of the Portfolio and has commenced detailed due diligence on the properties.  The Company has also commenced discussions with its advisers, lenders and a number of the larger shareholders on the potential approval and funding of the Acquisition. These discussions have been favourable, both in terms of support for the proposed Acquisition and the raising of new equity to help finance the Acquisition. 

Under the heads of terms relating to the Acquisition, the vendor will receive a material proportion of the consideration in the form of new ordinary shares in the Company.  The balance of the consideration will be funded through a combination of the Company's existing cash resources, the proceeds of an open offer to existing shareholders, a placing, and an offer of subscription, including an intermediaries' offer, of new ordinary shares (the "Issue") and through debt finance. The Issue will be conditional on shareholder approval, as will the Acquisition given its size.

The Acquisition, if approved, will increase the Company's property portfolio to over £315 million.  The Acquisition will increase the Company's exposure to the retail warehouse sector and further diversify the tenant base and geographical spread of the portfolio. As a result of the Acquisition, the Company's fixed costs will be spread over a wider asset base which will reduce the Company's ongoing charges ratio. The proposed Acquisition is consistent with the Company and its Manager's investment style and income strategy and Ediston believes that there is credible growth potential and scope to improve the income stream of each asset in the Portfolio. Ediston has also identified other property opportunities which, if the maximum number of shares is subscribed under the Issue, can grow the Company and provide further benefits to shareholders over the longer term.

In the event that the Acquisition becomes unconditional, the Board expects that the Company's dividend cover will increase from its already fully covered position. 

The Board is proposing to raise additional equity share capital by offering up to approximately 100 million ordinary shares in the capital of the Company, with priority being given to existing investors who wish to participate in the Issue. It is expected that the Issue will be priced to cover the costs of the transaction and will be designed to protect asset value and income cover of existing investors, regardless of their participation in the Issue. The Board is also expecting to increase the Company's borrowings on similar terms to the existing facilities, although the Company's loan to value is expected to remain within the normal bounds of 30 per cent. loan to value and in any event it will remain within the existing limit of 35 per cent. 

The Company intends to publish, within the next two months, a prospectus and a circular, each of which will provide Shareholders with further details of the Acquisition and the open offer, placing, offer for subscription and intermediaries offer, including how the new Shares are to be priced and the potential benefits of the transaction for existing Shareholders.  The circular will also provide shareholders with notice of a general meeting of the Company to consider and, if thought fit, pass the necessary, recommended resolutions to approve the Acquisition and the issue of the new ordinary shares on a non pre-emptive basis. 

The Board will continue discussions with its advisers, lenders, shareholders and potential new investors to obtain their formal support for the transaction and fundraising following publication of the prospectus and circular.  Whilst confidence has been obtained in advance of announcing the proposed Acquisition, there is no guarantee that this transaction will complete and fulfil all the conditions required. In such an event, the Company would incur costs in relation to the Acquisition and the fundraising but these have been contained to minimise risk to the Company.  If the Acquisition becomes unconditional, the Portfolio is expected to be acquired in early December 2017.

The Company expects to make a further announcement of the progress on the transaction closer to when the formal documentation is ready for publication and will be announcing its unaudited net asset value for the period ended 30 September 2017 in the near future.

William Hill, Chairman of Ediston Property Investment Company plc commented:

"The proposed transaction is entirely consistent with the way in which the Board has signalled its desire to grow the Company.  It increases the equity base of the company without cash drag, has the potential to grow NAV per share by adding some interesting assets to the portfolio and is accretive to dividend cover and its quality, the latter being achieved by an increase in the weighted unexpired lease term, covenant strength and diversity of the Company's rental income.

The Manager has been patient in seeking to acquire a portfolio which matches the "Ediston Style" of assets where it can enhance value with their proven asset management skills.  In promoting an acquisition in which the vendor is keen to retain an equity stake and become a wider shareholder in the Company following completion, we have secured an opportunity which offers the parties their mutual objectives. 

Retail warehousing is a sub sector of the market in which the Manager has considerable investment and development experience and the Portfolio has the qualities which fit neatly with Ediston's active asset management style."

For further information please contact:

Ediston Properties Limited Danny O'Neill Calum Bruce	0131 225 5599
Canaccord Genuity Limited Will Barnett Robbie Robertson	020 7523 8000

Background to the Company

The Company is a UK-listed Real Estate Investment Trust (REIT), launched in October 2014 and listed on the London Stock Exchange, investing in commercial property across the UK.  The Company's objective is to give shareholders an attractive level of income, coupled with the prospect of income and capital growth. This is achieved by the Manager through its intensive asset management style.

The investment policy is not benchmark-driven. The Manager seeks to identify suitable assets, through a detailed analysis of risk and the property fundamentals, combined with good knowledge of the local occupational market. The Manager's approach is to add value at all stages of the investment process through intensive entrepreneurial asset management.

As at 30 June 2017, the Company had net assets of £144.33 million, a net asset value per share of 110.18p, gearing of under 30 per cent. and it pays covered monthly dividends equivalent to 5.5p per share annualised.  Since launch, the shares in the Company have, on average, traded at a premium, giving it the ability to raise £35.9 million as a secondary issue in 2015 and through more recent small tap issuance raising a further £3.0 million.

Notes:

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.  Upon the publication of this announcement via Regulatory Information Service this information is now considered to be in the public domain.

The information in this announcement is for background purposes only and does not purport to be full or complete.  No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness.  The material set forth herein is for information purposes only.

 

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