Proposal to De-list from IPSX

M7 Regional E-Warehouse REIT PLC

27 October 2023

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY (IN WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICTON WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THE JURISDICTON.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATON FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

For immediate release.

27 October 2023

M7 REGIONAL E-WAREHOUSE REIT PLC

(the "Company")

Proposal to De-list from IPSX

M7 Regional E-Warehouse REIT Plc (the "Company") announces its intention to de-list its ordinary shares from the Wholesale Market of the International Properties Securities Exchange ("IPSX" or the "Exchange").

This decision follows the Company's announcement of 4 September 2023 regarding a letter received from IPSX stating that the Exchange's board of directors will wind down the operations of IPSX and, as a result, terminate the Admission Agreement between the Company and IPSX. The Exchange also informed the Company that the final day of trading of the IPSX will be 1 December 2023. 

The Company's board of directors (the "Board") therefore considered this news alongside a number of other factors including the deterioration in the economic environment since December 2021, when the Company's shares were first admitted to IPSX ("Admission"), the ongoing regulatory compliance burden, the administrative costs incurred by the Company as a listed vehicle and the low level of liquidity in the Company's ordinary shares. 

As a result, the Board has concluded that it is in the best interests of the Company and its shareholders to de-list the Company from IPSX and not seek a listing on an alternative platform but to restructure the Company and its subsidiaries into a private fund.  In conjunction with the de-listing and restructuring, the Company also intends to leave the REIT regime on its de-listing from IPSX.  The Board has consulted with tax advisers and does not believe that the loss of REIT status should result in any material additional tax liability.    

By way of background, since Admission, market conditions have changed substantially.  This has impacted the Company in a number of ways including reducing the fair value of the Company's investment property portfolio, putting pressure on the loan to value ratio and increasing interest expense.

§ Between Admission and the Company successfully completing the refinancing of its senior debt on 26 September 2023 (the "Refinancing"), the SONIA rate has increased by more than 500 basis points. While the Company's senior debt was hedged using an interest rate cap, this has since matured resulting in substantial additional interest payments having to be made by the Company.

§ The fair value of the Company's investment property portfolio reduced from £110.7 million at Admission to £101.8 million at 30 September 2023.

§ Under the terms of the new facility agreement that was entered into as part of the Refinancing, the Company is required to reduce its loan to value ratio over the next 18 months. To achieve this the Company needs to make quarterly amortisation payments totalling approximately £1.8 million over this period. 

As a result of these increased cash pressures, it is expected that it will become more difficult for the Company to meet certain REIT conditions, with any such breach having as its likely consequence a tax penalty for the Company. On this basis, it will become less advantageous for the Company to remain within the REIT regime. 

Against this background therefore, the Company will shortly send a circular to its shareholders providing further details in relation to its de-listing (including the timetable for such de-listing) and leave the REIT regime, as well as the Board's proposals for the restructuring.

The Company continues to demonstrate operational resilience against a challenging macro backdrop.  Occupancy at 30 September 2023 is 98.21% and gross rental income is £8.84 million.  Rent collections remain strong at 94.79% for the year-to- date period ended 30 September 2023.  Whilst noting that the investment property valuation has declined since Admission, this decline is driven by an outward yield shift following a period of limited market transactional evidence as investor sentiment continues to be affected by the higher interest environment.  The valuation performance of the portfolio is reflective of the wider retail warehouse market. 

For further information, please visit www.rewreit.co.uk or contact:

M7 Regional E-Warehouse REIT PLC
James Max - Chairman		via FTI Consulting below
M7 Real Estate Ltd Richard Croft	[phone]
Dickson Minto (Lead Advisor)		[phone]
FTI Consulting (Communications Adviser)		[phone]
Richard Sunderland / Eve Kirmatzis		[e-mail]
Alter Domus (UK) Limited (Company Secretary)		[phone]

The Company's ISIN is GB00BLN7H037.

 

END