TIDMCREI
RNS Number : 1384L
Custodian REIT PLC
30 September 2016
THE INFORMATION IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT
FOR PUBLICATION, RELEASE OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN
OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE
REPUBLIC OF SOUTH AFRICA, ANY EEA STATE (OTHER THAN THE UK) OR ANY
OTHER EXCLUDED TERRITORY.
30 September 2016
Custodian REIT plc
("Custodian REIT" or "the Company")
Acquisition of Property Portfolio and Intention to Issue
Equity
Property portfolio
Custodian REIT (LSE: CREI), the UK property investment company,
is pleased to announce the acquisition of a GBP26.75 million
portfolio of properties ("the Portfolio").
The Portfolio comprises 10 light industrial sites spread
throughout the UK with a current passing rent of GBP2.21 million
reflecting a net initial yield of 7.86%, with an expected
reversionary yield of 8.03%. The Portfolio's weighted average
unexpired lease term ("WAULT") is 5.4 years.
The Company acquired the Portfolio by purchasing the entire
issued share capital of BLME (UK) GP Limited and LIBF (II)
S.à.r.l., being the partners in BLME Light Industrial Building LP,
an English limited partnership holding the title and beneficial
interest in the Portfolio. The acquisition was funded using the
Company's existing cash and debt facilities, increasing the
Company's borrowings to 20.7% loan-to-value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing
Director of Custodian Capital Limited (the Company's discretionary
investment manager), said:
"The Portfolio is a strong fit with our investment strategy and
is complementary to our existing property portfolio, augmenting our
regional, industrial bias and adding diversification by both tenant
and location. The Portfolio was compiled between 2011 and 2015 but
is being sold due to the vendor restructuring its funds business.
This provides Custodian REIT with opportunities to continue the
asset management plan and enhance value.
"We agreed terms at the height of market uncertainty regarding
the EU referendum and anticipate a valuation increase at 30
September 2016 as market sentiment recovers. This corporate
transaction offered compelling economic benefits for the Company
and the vendor versus the Company acquiring the properties
directly, demonstrating our commitment to enhance shareholder value
and secure economies of scale through growth in the fund."
Details of each property in the Portfolio are set out at the end
of this announcement.
Intention to issue equity
Following the acquisition, in response to continued investor
demand and to take advantage of a pipeline of attractive investment
opportunities and prevailing market conditions, the Board today
announces that the Company intends to raise additional equity
capital through the issue of new ordinary shares ("the New Shares")
by way of a placing ("the Placing"). The Board proposes to raise
gross proceeds of up to GBP20 million, with the ability to increase
this dependent on demand and pipeline opportunities.
The New Shares will be issued at a premium of 3.5% to the
unaudited net asset value ("NAV") per share as at 30 September
2016(1) ("the Issuance Price"), to be published on 14 October
2016.
The Company's existing Placing Programme set out in the
Company's prospectus dated 4 November 2015 ("the Prospectus") will
remain in place until its expiry on 3 November 2016.
1.Adjusted to exclude the dividend relating to the quarter
ending 30 September 2016, payable on 31 December 2016 to
shareholders on the register on 14 October 2016.
Reasons for the Placing and use of proceeds
The acquisition of the Portfolio and a committed pipeline of
GBP22.4 million of further property acquisitions will increase
loan-to-value to 23.9%, compared to target gearing of 25.0%
loan-to-value, leaving limited headroom for further investment. The
net proceeds of the Placing are expected to be used firstly to
repay an element of the GBP22 million drawn at 28 September 2016
under the Company's GBP35 million revolving credit facility
("RCF"). Any remaining net proceeds are then expected to be used to
acquire additional UK commercial real estate that can further
diversify the portfolio and enhance income yield. Net proceeds of
the Placing are expected to be fully invested within three to six
months after admission of the New Shares, depending on the
amount.
Pipeline of acquisition opportunities
We continue to experience a strong flow of investment
opportunities and currently have GBP22.4 million of assets under
offer, in funding of a pre-let development or in solicitors' hands.
We have seen a steady flow of opportunities following the EU
referendum and have been pleased to capitalise on some short-term
pricing opportunities as open-ended funds continue to unwind their
liquidity positions and the market adjusts. We remain confident in
regional property markets, which are showing no signs of change to
the fundamental dynamics that lead to rental growth, and fully
expect to acquire assets that will enhance cash flow and safeguard
dividend cover and growth.
How to participate
Qualified investors (as defined in section 86(7) of the
Financial Services and Markets Act 2000 (as amended)) are invited
to apply for New Shares by contacting Numis Securities Limited
("Numis") on the contact details below. The decision to allot New
Shares to any qualified investor shall be at the absolute
discretion of the Company and Numis.
Expected timetable
Fund raise opens 30 September 2016
---------------------------------- ------------------------------
Announcement of unaudited 7.00 a.m. 14 October 2016
NAV as at 30 September
2016 and Issuance Price
---------------------------------- ------------------------------
Dividend relating to the 14 October 2016
quarter ending 30 September
2016 record date
---------------------------------- ------------------------------
Latest time and date for 12 p.m. 21 October 2016
receipt of commitments
under the Placing
---------------------------------- ------------------------------
Announcement of results 7.00 a.m. 24 October 2016
of the Placing
---------------------------------- ------------------------------
Admission and dealings 8.00 a.m. 26 October 2016
in New Shares on the London
Stock Exchange's Main Market
---------------------------------- ------------------------------
Commenting on the Placing, Richard Shepherd-Cross said:
"We continue to identify many opportunities in the property
market, as highlighted by today's portfolio acquisition. Although
the Placing proceeds initially will be used to repay borrowings, we
intend to use the Placing proceeds in conjunction with our RCF
facility to enhance the Company's property portfolio in the manner
most likely to deliver additional shareholder value."
The Portfolio
Details of each property within the Portfolio are set out
below:
West Bromwich - a 59,973 sq ft unit, five miles north-west of
Birmingham city centre and 0.6 miles from junction 1 of the M5
providing access to the M6, M42 and M40. The property is let to
Oyez Straker Group Limited with an unexpired term of 11.5 years and
passing rent of GBP280,000 per annum. Nearby occupiers include
Interlink Express, Keltruck, and Office Team. Hawthorns Business
Park is an established location and the lease is subject to five
yearly fixed rental uplifts, which guarantees future rental
growth.
Christchurch - a 34,046 sq ft unit within eight miles of
Bournemouth and with good access to the M27. The property is let to
Interserve Construction Limited with an unexpired term of 6.5 years
and passing rent of GBP199,496 per annum. Nearby occupiers include
Screwfix, Lidl, Wickes and Howdens Joinery. The tenant has recently
installed a significant amount of fixed plant, demonstrating their
commitment to the location.
Sheffield - a 23,000 sq ft unit with access to junctions 33 and
34 of the M1. The property is let to Arkote Limited with an
unexpired lease of 7.6 years and passing rent of GBP120,750 per
annum. Nearby occupiers include Jack Wills, FPS Distribution, HSS
Hire and Hertz. This is a modern building in an established
industrial location situated between Sheffield city centre and the
M1 Motorway.
Warrington - a 40,810 sq ft unit with excellent access to the
M6, M63 and M56. The property is let to Dinex Limited with an
unexpired lease of 9.5 years and passing rent of GBP183,645 per
annum. Nearby occupiers include Norbert Dentressangle, Iceland,
Marks and Spencer and DHL. This property acts as Dinex's UK
headquarters. The tenant recently entered into a 10 year lease
renewal to December 2025.
Warrington - a 66,990 sq ft recently refurbished unit with
excellent access to the M6, M63 and M56. The property is let to DHL
Supply Chain Limited with an unexpired lease of 4.8 years and
passing rent of GBP229,653 per annum. At GBP3.43 per sq ft the unit
is under-rented and an outstanding April 2016 rent review provides
opportunity for an immediate uplift.
Manchester - a 21,357 sq ft unit nine miles south-west of
Manchester and nearby junctions 11 and 12 of the M62. The property
is let to Northern Commercial Limited with an unexpired lease term
of 9.9 years and passing rent of GBP140,000 per annum. Nearby
occupiers include DPD, Ceva Logistics, Screwfix and FX Sameday.
This modern commercial vehicle maintenance/repair unit has an
extremely low site cover of only 19%, providing potential for
further development.
Atherstone - a 23,046 sq ft industrial estate near to the A5
which links the M1 and M6. The property is let to North
Warwickshire Borough Council with an unexpired lease of 3.8 years
and passing rent of GBP115,000 per annum. Nearby occupiers include
Aldi (UK Head office), 3M and TNT. This is an established
industrial and distribution location and the site has short-term
asset management opportunities.
Westerham - a 19,300 sq ft unit located 23 miles south of
central London and 22 miles from Gatwick Airport with excellent
access to junction 5 of the M25 and junction 21 of the M6. The
property is let to Aqualisa Products Limited with an unexpired
lease of 9.2 years and passing rent of GBP135,000 per annum. The
tenant has recently consolidated its operations to this site,
emphasising its belief in the strength of the location. Industrial
space in this area is in short supply, leading to upward pressure
on rents and the likelihood of rental growth at rent review or
lease renewal.
Gateshead - six well specified warehouse/distribution units
occupying a total of 83,025 sq ft adjacent to the Metrocentre with
excellent access to the A1. The units are let to Boots UK Limited,
WH Partnership Limited, Rexel UK Limited, Travis Perkins
(Properties) Limited and The Human Office Limited with a WAULT of
1.7 years and passing rent of GBP331,200 per annum. Significant
asset management opportunities have been identified at this
property which, once complete, will enhance value.
Kettering - eight modern industrial/warehouse units of 65,034 sq
ft located near to junction 9 of the A14 which links the M1, A1(M)
and M11. The units are let to VP Packaging Limited, DP Press
Limited, Nital Training Academy Limited, Rapid Vehicle Repairs
Limited and Equinox Aromas Limited with a WAULT of 6.6 years and
passing rent of GBP278,350 per annum. Nearby occupiers include
Weetabix, Alpro and Knights of Old Group. This location is
experiencing high demand for industrial units of this
specification.
-Ends-
For further information, please contact:
Custodian Capital Limited
Richard Shepherd-Cross / Nathan Tel: +44 (0)116 240
Imlach / Ian Mattioli 8740
www.custodiancapital.com
Numis Securities Limited
Hugh Jonathan / Nathan Brown Tel: +44 (0)20 7260
1000
www.numiscorp.com
Notes to Editors
Custodian REIT plc is a UK real estate investment trust, which
listed on the main market of the London Stock Exchange on 26 March
2014. Its portfolio comprises properties predominantly let to
institutional grade tenants on long leases throughout the UK and is
characterised by small lot sizes, with individual property values
of less than GBP10 million at acquisition.
The Company offers investors the opportunity to access a
diversified portfolio of UK commercial real estate through a
closed-ended fund. By targeting smaller lot size properties, the
Company intends to provide investors with an attractive level of
income with the potential for capital growth.
Custodian Capital Limited is the discretionary investment
manager of the Company.
For more information visit www.custodianreit.com and
www.custodiancapital.com.
Important notice
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
Custodian REIT plc 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. Neither
the content of the Company's website (or any other website) nor any
website accessible by hyperlinks to the Company's website (or any
other website) is incorporated in, or forms part of, this
announcement.
This announcement has been prepared by, and is the sole
responsibility of, Custodian REIT Plc. Terms used and not defined
in this announcement bear the meaning given to them in the
Company's November 2015 Prospectus.
Numis is acting only for Custodian REIT Plc in connection with
the matters described in this announcement and is not acting for or
advising any other person, or treating any other person as its
client, in relation thereto and will not be responsible to anyone
other than the Company for providing the regulatory protection
afforded to clients of Numis or advice to any other person in
relation to the matters contained herein.
The Company is not and will not be registered under the US
Investment Company Act of 1940, as amended. The Ordinary Shares
have not been, nor will they be, registered under the US Securities
Act of 1933, as amended or with any securities regulatory authority
of any state or other jurisdiction of the United States or under
the applicable securities laws of any other Excluded Territory.
Subject to certain exceptions, the Ordinary Shares may not be
offered or sold in the United States or any Excluded Territory or
to or for the account or benefit of any national, resident or
citizen of any Excluded Territory, which includes any person
located in the United States. Placings under the Placing Programme
and the distribution of this announcement in other jurisdictions
may be restricted by law and the persons into whose possession this
announcement comes should inform themselves about, and observe any
such restrictions.
This announcement includes "forward-looking statements". All
statements other than statements of historical facts included in
this announcement, including, without limitation, those regarding
the Company's business strategy and plans are forward-looking
statements.
Forward-looking statements are subject to risks and
uncertainties and accordingly the Company's actual future financial
results and operational performance may differ materially from the
results and performance expressed in, or implied by, the
statements. These factors include but are not limited to those that
are described in the Company's November 2015 prospectus. Given
these uncertainties, undue reliance should not be placed on such
forward-looking statements.
These forward-looking statements speak only as at the date of
this announcement. The Company expressly disclaims any obligation
or undertaking to update or revise any forward-looking statements
contained herein to reflect actual results or any change in the
assumptions, conditions or circumstances on which any such
statements are based unless required to do so by the Financial
Services and Markets Act 2000, the Financial Services Act 2012, the
Listing Rules, the Disclosure Rules and Transparency Rules or the
Prospectus Rules of the Financial Conduct Authority or other
applicable laws, regulations or rules.
Certain statements have been made with reference to forecast
price changes, economic conditions and the current regulatory
environment. Nothing in this announcement should be construed as a
profit forecast. Past share price performance cannot be relied on
as a guide to future performance.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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