Proposed Placing

RNS Number : 3991Y

Picton Property Income Limited

01 December 2014

 



THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, INTO THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, NEW ZEALAND, CANADA, JAPAN, SOUTH AFRICA, ANY MEMBER STATES OF THE EEA (OTHER THAN THE UNITED KINGDOM) OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS AN ADVERTISMENT AND NOT A PROSPECTUS. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER OR INVITATION TO PURCHASE OR ACQUIRE ANY TRANSFERABLE SECURITIES (AS DEFINED IN SCHEDULE 11A OF THE FINANCIAL SERVICES AND MARKETS ACT 2000), NOR SHALL IT FORM THE BASIS OF ANY CONTRACT FOR THE SALE OF ANY INTEREST IN A TRANSFERABLE SECURITY OR A SOLICITATION, INDUCEMENT, ADVICE OR RECOMMENDATION TO EFFECT ANY TRANSACTION OF ANY KIND WHATSOEVER. POTENTIAL INVESTORS SHOULD READ THE RELEVANT PROSPECTUSES CAREFULLY BEFORE ANY INVESTMENT DECISION IS MADE.

PICTON PROPERTY INCOME LIMITED

("Picton" or the "Company")

PROPOSED PLACING

The Board of Directors of Picton (the ''Board'') announces a proposed placing of new ordinary shares of no par value in the Company ("New Ordinary Shares") at a price of 63.75 pence per New Ordinary Share (the "Placing Price") to raise gross proceeds of approximately £25 million in accordance with the terms and conditions of the Placing Programme established under the prospectus issued on 1 May 2014, as amended (the "Placing").

Highlights

·      Proposal to issue up to 39,215,686 New Ordinary Shares at 63.75 pence per New Ordinary Share to raise gross proceeds of approximately £25 million

·      Issue Price of 63.75 pence per New Ordinary Share which represents a premium of 2.3% to the 30 September 2014 EPRA NAV of 62.30 pence per share and discount of 2.3% to the Closing Share Price of 65.25 pence per share as at 28 November 2014

·      The Company raised gross proceeds of £35 million in May 2014 and has fully utilised these proceeds subsequently, including the acquisition of £31 million of additional opportunistic investments and £4 million invested in existing portfolio assets

·      The Placing will enhance the Company's ability to take advantage of current and anticipated investment opportunities and allow for further investment in the Company's existing portfolio

·      Approximately 90% of the targeted proceeds of the Placing are expected to be invested in property acquisitions with the remainder to be invested in opportunities within the existing portfolio. It is expected that the targeted proceeds of the Placing will be substantially invested, or committed, by 31 March 2015

·      The Placing will provide a larger equity base over which the costs of the Company can be spread which is expected to lead to a decrease in the ongoing charges ratio due to the Company's  internalised management model

Background to the Placing

In May 2014, the Company raised gross proceeds of £35 million through an Initial Placing and Offer for Subscription of 59,322,034 shares and, at that time, received approval from Shareholders to undertake a placing programme to issue a further 110,677,966 shares on, or before, 30 April 2015.

The Initial Placing proceeds have now been fully invested, including the acquisition of two assets costing £31 million with an average net initial yield of 7.3%.

The implementation of the Company's corporate and operational strategy has delivered the following key benefits in the period to 30 September 2014:

·      Net assets of £273.7 million as at 30 September 2014. This represents a 28% increase since 31 March 2014

·      EPRA net asset value of 62.3 pence per share as at 30 September 2014. This represents an increase of 10.5% over the six month period

·      Loan to value ratio to 43.2%. This represents a decrease of 9.4% from the 31 March 2014 ratio of 47.7%

·      Occupancy rate increased from 91% at 31 March 2014 to 94% as at 30 September 2014

·      The Company paid two quarterly dividends during the six month period, each of 0.75 pence per Ordinary Share with the dividend yield, based on the closing share price at 30 September, being 4.7%. For the six month period to 30 September 2014, the dividend cover was 114%.

Use of Proceeds

It is expected that approximately 90% of the net proceeds from the Placing will be used for new property acquisitions, in accordance with the Company's investment policy, with the remainder to be utilised within the existing portfolio.

The Company's portfolio diversification by geography and property type enables it to consider a wide range of investment opportunities across the property market and, as such, the Board believes the Company will have continued access to substantial deal flow. For example, in the six months to September 2014, the Company saw over £3 billion of investment transactions, across 230 deals with an average lot size of approximately £13 million. Therefore, the Board and the Investment Manager are confident that the proceeds of the Placing will be substantially invested, or committed, by 31 March 2015.

Acquisitions will be made on an opportunistic basis with the Company seeking to acquire assets with strong property fundamentals that meet the Company's investment objective in the short to medium term. The Company is in exclusive negotiations in respect of one specific asset, which is adjacent to an existing holding, and in addition, the Company has a number of other assets under active consideration at yields of 6.0% to 9.0%, which could be progressed further upon completion of the Placing.

The Company's investment of the net proceeds is expected to be income accretive and to improve the income profile within the property portfolio, as well as providing further asset and income diversification.

It is expected that the investment of the net proceeds will provide further opportunities to enhance both the income and/or capital position through active asset management, whilst continuing to increase the average lot size within the Company's portfolio.

Benefits of the Placing

The Placing Programme was structured to enable the Company to raise additional capital as and when it identifies properties that are suitable for acquisition. This enables the Investment Manager to act opportunistically by making a series of accretive property acquisitions.

The Board believes that the Placing will have the following benefits to Shareholders and the Company:

·      providing additional capital will enable the Company to take advantage of current and anticipated investment opportunities in the market and make further investments in the Company's existing investment portfolio

·      as the Company is actively considering a number of specific property opportunities, the Placing will assist in matching the capital requirements of the Company to the investment opportunities identified

·      the expected accretive yield on new investments should improve the income profile within the property portfolio as well as providing further asset and income diversification

·      providing a larger equity base over which the fixed costs of the Company may be spread, thereby reducing the Company's ongoing management cost per share. This has been demonstrated historically through the ongoing charges ratio which, as Net Assets have grown from £196 million on 31 March 2012 to £274 million on 30 September 2014, has seen a corresponding decrease from 2.0% to 1.6%. Assuming the Placing Programme is fully utilised, on a like for like basis, the ongoing charges ratio is expected to reduce further, to under 1.4%

·      strengthening the Company's balance sheet will improve its position to access favourably priced debt finance in the future. In addition, an increase in the asset base outside the existing security pools will increase the Company's optionality and flexibility in relation to future debt financing

·      a further potential benefit of the Placing is the capacity to further diversify the Shareholder register as well as potentially enhancing liquidity in the Ordinary Shares

Terms of the Placing

The Company is proposing to issue up to 39,215,686 New Ordinary Shares at 63.75 pence per New Ordinary Share to raise gross proceeds of approximately £25 million. The Placing is being made pursuant to the terms and conditions of the Placing Programme set out in Appendix 3 of the Prospectus published by the Company on 1 May 2014, as amended, and updated by the supplementary prospectuses published by the Company on, respectively, 14 July 2014, 4 August 2014, 22 October 2014 and 21 November 2014.

The Placing is expected to close at 1.00 pm (London time) on 16 December 2014, but may close earlier (or later) at the absolute discretion of the Company, in consultation with J.P. Morgan Cazenove and Oriel Securities who are acting as joint sponsors and corporate brokers to the Company.

Under the Placing Programme, as approved by Shareholders on 19 May 2014, and following the Initial Placing and Offer for Subscription in May 2014, the Company has the authority to issue a further 110,677,966 shares. New Ordinary Shares can only be issued at a premium to the prevailing NAV at the time of issue, with the Placing Programme ending on, or before, 30 April 2015. 

The Placing Price reflects a 2.3% discount to the closing price of 65.25 pence per Ordinary Share on 28 November 2014 and a 2.3% premium to the Company's 30 September 2014 EPRA Net Asset Value per Ordinary Share. Therefore, the Placing will be accretive for existing Shareholders (net of fees and expenses associated with the Placing).

The New Ordinary Shares will, when issued, be credited as fully paid and rank pari passu with the existing Ordinary Shares of no par value in the capital of the Company ("Ordinary Shares"), including the right to receive all future dividends and distributions declared, made or paid.

The Board has also reserved the right, in consultation with J.P. Morgan Cazenove and Oriel Securities, to increase the number of New Ordinary Shares offered pursuant to the Placing up to a maximum of 110,677,966 million New Ordinary Shares representing the balance for which authority remains to issue pursuant to the Placing Programme. Any such increase will be announced via a Regulatory Information Service.

Participation in the Placing will be available only to persons falling within Articles 49(2)(a) to (d) or 19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005. Such persons are invited to apply for New Ordinary Shares by contacting their usual contact at Oriel Securities and / or J.P. Morgan Cazenove.

In the event that the number of New Ordinary Shares applied for under the Placing exceeds 39,215,686 shares, or such higher amount as determined by the Board (as noted above), it would be necessary to scale back applications under the Placing. In such event, New Ordinary Shares will be allocated at the discretion of the Directors. The Directors will have regard to the applications from existing Shareholders, with a view to ensuring, where reasonably possible, that existing Shareholders are allocated such percentage of New Ordinary Shares as is as close as possible to their existing percentage holding of Ordinary Shares.

The Placing is not being underwritten.

Applications will be made to the FCA for admission of the New Ordinary Shares to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities (''Admission''). It is expected that Admission will become effective and that unconditional dealings in the New Ordinary Shares will commence at 8.00 a.m. (London time) on or around 19 December 2014.

The New Ordinary Shares will be issued in registered form and may be held in uncertificated form. The New Ordinary Shares allocated will be issued to Placees through the CREST system unless otherwise stated. The New Ordinary Shares will be eligible for settlement through CREST with effect from Admission.

Nick Thompson, Chairman of Picton, said:

"This programme forms part of our stated strategy to take advantage of the market opportunities that we are seeing, on an opportunistic and selective basis.  We have the added benefit that this strategy continues to reduce our overall expense ratio, and further strengthens the balance sheet"

Michael Morris, Chief Executive of Picton Capital, said: 

"This year we have demonstrated our ability to source attractive investment opportunities that have provided NAV and income growth for shareholders.  Furthermore where we have invested into our existing portfolio, we have enjoyed similar successful results.  The purpose of this placing is to facilitate a continuation of that strategy"

Expected Timetable

Placing opens	1 December 2014
Latest time and date for receipt of Placing commitments	1.00 p.m. on 16 December 2014
Announcement of the results of the Placing	17 December 2014
Admission of the New ordinary Shares to the Official List and to trading on the London Stock Exchange's main market for listed securities	8.00 a.m. on, or around, 19 December 2014
Crediting of CREST stock accounts	19 December 2014
Share certificates dispatched  (where appropriate)	week commencing 22 December 2014 (or as soon as possible thereafter)

The Placing may close earlier (or later) than indicated above at the absolute discretion of the Company, in consultation with J.P. Morgan Cazenove and Oriel Securities. In such event, the Company will notify investors by the publication of a notice through a Regulatory Information Service.

Dealing codes

Ticker	PCTN
ISIN for the New Ordinary Shares	GB00BOLCW208
SEDOL for the New Ordinary Shares	BOLCW20

Capitalised terms used but not defined in this announcement will have the same meaning as set out in the prospectus published on 1 May 2014, as amended. Copies of that prospectus and the supplementary prospectuses published, respectively, on 14 July 2014, 4 August 2014, 29 October 2014 and 21 November 2014 are available at www.hemscott.com/nsm.do and on the Company's website at www.pictonproperty.co.uk.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Northern Trust International Fund Administration Services (Guernsey) Limited	Telephone: [phone]
David Sauvarin The Company Secretary Trafalgar Court Les Banques St Peter Port Guernsey GY1 3QL
Picton Capital Limited Michael Morris	Telephone: [phone]
J.P. Morgan Cazenove William Simmonds	Telephone: [phone]
Oriel Securities Limited Roger Clarke Neil Winward	Telephone: [phone]
Tavistock Jeremy Carey James Verstringhe	Telephone: [phone]

Important Information

This Announcement has been issued by and is the sole responsibility of the Company.

This Announcement is for information purposes only and does not constitute an invitation to subscribe for or otherwise acquire or dispose of securities in the Company in any jurisdiction. The information contained 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. This Announcement does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase, any investments nor shall it (or the fact of its distribution) form the basis of, or be relied on in connection with, any contract therefor.

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 shares in 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 prospectus published by the Company and any supplement thereto in connection with the admission of ordinary shares of the Company to the premium segment of the Official List of the UK Listing Authority and to trading on the London Stock Exchange's main market for listed securities.

J.P. Morgan Cazenove which is authorised by the Prudential Regulation Authority and regulated by the Prudential Regulation Authority and the Financial Conduct Authority and Oriel Securities Limited which is authorised and regulated in the United Kingdom by the Financial Conduct Authority (together, the "Joint Sponsors"), are each acting exclusively for the Company and no-one else in connection with the Placing or the matters referred to in this Announcement, will not regard any other person as their respective client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the Placing or any transaction or arrangement referred to in this Announcement.

This Announcement is not for release, publication or distribution (directly or indirectly) in or into the United States of America (including its territories and possessions, any of the United States and the District of Columbia), Canada, Australia, New Zealand, Japan, the Republic of South Africa, any member states of the EEA (other than the United Kingdom) or to any "US person" as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act") or into any other jurisdiction where applicable laws prohibit its release, distribution or publication. The distribution of this Announcement and the Initial Offers and Placing Programme in certain jurisdictions may be restricted by law. No action has been taken by the Company or the Joint Sponsors that would permit an offering of the New Ordinary Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and the Joint Sponsors to inform themselves about, and to observe, such restrictions.

The New Ordinary Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or benefit of, US Persons.  The Company will not be registered as an "investment company" under the Investment Company Act of 1940, and investors will not be entitled to the benefits of that Act.  In addition, relevant clearances have not been, and will not be, obtained from the securities commission (or equivalent) of any province of Australia, New Zealand, Canada, Japan, the Republic of South Africa or any member state of the EEA (other than the United Kingdom) and, accordingly, unless an exemption under any relevant legislation or regulations is applicable, none of the New Ordinary Shares may be offered, sold, transferred or delivered, directly or indirectly, in Australia, New Zealand, Canada, Japan, the Republic of South Africa or any member state of the EEA (other than the United Kingdom).

The New Ordinary Shares will be issued pursuant to the Placing Agreement dated 1 May 2014 between the Company, the Investment Manager, J.P. Morgan and Oriel Securities. Under the terms of the Placing Agreement J.P.Morgan and Oriel Securities have agreed to use their reasonable endeavours to procure subscribers for the New Ordinary Shares issued under the Placing Programme and in consideration for their services in this Placing, J.P.Morgan and Oriel Securities (i) will be paid a commission equal to 0.7 per cent of the Gross Proceeds of the Placing and; (ii) may be paid a discretionary fee of 0.5 per cent of the Gross Proceeds of the Placing. Further information on the Placing Agreement is contained within the Prospectus published by the Company on 1 May 2014.

No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Company, Picton Capital Limited (the "Investment Manager"), the Joint Sponsors or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed. The Company, the Investment Manager, the Joint Sponsors and their respective affiliates accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this Announcement or its contents or otherwise arising in connection therewith.

Certain statements in this Announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained in this Announcement is subject to change without notice and neither the Company nor the Joint Sponsors assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

The expected timetable including the date of Admission may be influenced by a range of circumstances, including market conditions. There is no guarantee that Admission will occur and you should not base your financial decisions on the Company's intentions in relation to the Placing Programme and Admission at this stage. Acquiring New Ordinary Shares to which this Announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering making such an investment should consult an authorised person specialising in advising on such investments. This Announcement does not constitute a recommendation concerning the Placing. The value of New Ordinary Shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of the Placing for the person concerned. Past performance or information in this Announcement or any of the documents relating to the Placing cannot be relied upon as a guide to future performance.

 

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