TIDMSIR
RNS Number : 8775I
Secure Income REIT PLC
05 June 2014
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES OF
AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS AND ANY STATE OF
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5 June 2014
Secure Income REIT Plc
(the 'Company')
ADMISSION TO TRADING ON AIM AND PLACING
Secure Income REIT Plc, a newly created specialist long term
income UK REIT, announces that its entire issued share capital was
this morning admitted to trading on AIM, a market of the London
Stock Exchange, and that it has raised GBP15 million before
expenses through a placing of 8,620,689 new Ordinary Shares in the
Company at 174 pence per share (the "Placing").
On admission, the Company has 168,443,754 Ordinary Shares in
issue (including the Placing shares) and the market capitalisation
of the Company is GBP293 million at the Placing price. Dealings in
the Company's shares commenced at 8.00 am today under the ticker
SIR.
Highlights
HIGH QUALITY PORTFOLIO AND INVESTMENT STRATEGY FOCUSED ON SECURE
INCOME RETURNS
-- Secure Income REIT Plc is a UK REIT specialising in
generating long term, inflation protected, secure income from real
estate investments. Its investment strategy is designed to satisfy
investors' growing requirements for high quality, safe, inflation
protected income flows. The Board has a firm intention to build on
the initial portfolio to create a balanced, diversified portfolio
of long term asset backed income streams.
-- The Company owns a freehold portfolio (the "Portfolio") of 28
well established, key operating real estate assets independently
valued at circa.GBP1.46 billion as at 30 April 2014, reflecting a
yield of 6.1 per cent. after completion of the 2014 rent reviews in
July. The Portfolio includes some of the UK's top visitor
attractions and theme parks namely Madame Tussauds in London, Alton
Towers theme park and hotel, Thorpe Park and Warwick Castle, as
well as 21 private hospitals in the UK. The Company has a pro forma
EPRA NAV at admission of GBP289 million or 172 pence per share.
-- 98 per cent. of the Group's rental income is guaranteed by
financially strong, substantial global businesses with Merlin
Entertainments plc and Ramsay Health Care Limited each accounting
for 49 per cent. of rental income on the Portfolio, which currently
amounts to GBP92.4 million per annum. All leases have annual
upwards only rental uplifts throughout the lease term. The weighted
average unexpired lease term of the Portfolio is 25 years, very
significantly in excess of the average in the UK market today of
less than six years.
-- The Board aims to deliver attractive, risk-adjusted total
returns to shareholders alongside its ambition to create a
substantial diversified specialist long term income REIT.
Throughout this process, the directors' intention is to exercise
strong capital discipline and use equity prudently to enhance
returns for all shareholders, including through limiting the scale
of the Placing rather than raising 'blind pool' funds.
STRONG AND ALIGNED MANAGEMENT TEAM AND BOARD
-- The Company will be externally managed by Prestbury
Investments LLP, a management team comprising Nick Leslau, Mike
Brown, Sandy Gumm, Tim Evans and Ben Walford, which has been
responsible for a series of highly successful property investment
businesses over more than 25 years, including, most recently, Max
Property Group Plc (AIM: MAXP).
-- The Prestbury Group will own approximately GBP75 million of
shares in the Company at the Placing price or approximately 26 per
cent. of the issued share capital of the Company on admission,
including some 8 per cent. of the Placing shares subscribed for at
the Placing price, strongly aligning their interests with those of
all shareholders.
-- The Company also boasts an outstanding, experienced
non-executive Board chaired by Martin Moore (CEO of M&G Real
Estate Limited (previously Prudential Property Investment Managers
Limited) from 1996 to 2012 and past President of the British
Property Federation), with three further independent Directors
comprising Leslie Ferrar (currently non-executive Chairman of The
Risk Advisory Group and a non-executive member of the HMRC Risk and
Audit Committee), Jonathan Lane (Senior Adviser to Morgan Stanley
and Chairman of EMEA Real Estate Investment Banking) and Ian Marcus
(Chairman of the Bank of England's Commercial Property Forum and
former Managing Director and Chairman of Credit Suisse's European
Real Estate Investment Banking division). Three members of the
Prestbury Team (Nick Leslau, Mike Brown and Sandy Gumm) will also
be on the Board.
PLACING STATISTICS AND USE OF PROCEEDS
Placing price 174p
Number of shares in issue immediately prior
to admission 159,823,065
Number of new shares to be issued by the Company
pursuant to the Placing 8,620,689
Number of shares in issue immediately following
admission 168,443,754
Market capitalisation at the Placing price GBP293 million
immediately following admission
Placing shares as a percentage of the enlarged 5 per cent
issued share capital
Gross proceeds of the Placing receivable by GBP15 million
the Company
Estimated net proceeds of the Placing receivable GBP11.7 million
by the Company
Martin Moore, Chairman of Secure Income REIT plc, commented:
"The admission to AIM of a new, specialist, long term income
REIT offering protection against inflation and seeded by a circa.
GBP1.46 billion portfolio of high quality assets generating very
long term income from exceptional tenants is hugely exciting.
Collectively the Prestbury management team has delivered over 25
years of significant market outperformance and, with a 26 per cent.
shareholding, is very closely aligned with investors in creating a
substantial business over the coming years."
Nick Leslau, Chairman of Prestbury Investments added:
"The opportunities we have identified in the current markets to
take advantage of investors' growing requirement for secure income
streams present a clear and compelling rationale to launch what we
believe will become the UK's leading REIT specialising in long term
index linked rental income. Our established high quality portfolio,
together with the experience and calibre of our non-executive Board
and extended network of contacts, gives us a very strong foundation
from which to build a sizeable and balanced portfolio that will
deliver attractive returns for our shareholders."
For further information:
Secure Income REIT:
Martin Moore (Contactable through Tel: +44 (0)20 3727 1000
FTI Consulting)
Prestbury:
Nick Leslau/ Mike Brown/ Sandy Tel: +44 (0)20 7647 7647
Gumm
Oriel:
Mark Young/ Nicholas How Tel: +44 (0)20 7710 7600
FTI Consulting:
Stephanie Highett/ Richard Sunderland/ Tel: +44 (0)20 3727 1000
Nina Legge
SECURE INCOME REIT PLC - Further information
Investment Policy and Strategy
The Company will invest in long term, secure income streams from
real estate investments. A long term income stream is considered to
be one with (or a portfolio with) a weighted average term to
maturity at acquisition in excess of 15 years.
A striking feature of the UK real estate market over the past 20
years has been the clear reduction in income security caused by a
marked decline in the average term to the first lease break or
expiry. There are no significant UK REITs specialising only in long
leases across a range of property sectors. Against this backdrop
and mindful of the growing requirement amongst investors for
long-term, safe income flows, the Board aims to fill this gap and
build a substantial diversified long term income portfolio.
On admission, the Portfolio is considered by the Board to offer
attractive geared returns from high quality real estate, with
financially strong tenants operating with well established brands
in industry sectors with robust defensive characteristics. The
Board proposes to build on this solid foundation by seeking to:
-- diversify sources of income and enhance prospects for
attractive total returns through acquisitions;
-- extend the maturity profile of the Company's debt through
efficient use of capital in refinancing the existing debt in due
course; and
-- ultimately reduce overall leverage in order to enhance income
returns for investors.
The Board believes that it will be able to seek acquisition
opportunities from a range of sources including:
-- lenders seeking exits, in particular including those where
costs relating to legacy debt and hedging structures have to be
addressed;
-- operating businesses seeking efficient funding options
through property disposals;
-- assets within non-REIT structures where the seller's capital
gains tax issues prevent an exit without triggering excessive tax,
but where the Company's REIT structure creates a competitive
pricing advantage over non-REITs; and
-- opportunities where the Company's listed status can be used
to structure share for share transactions and to access effective
refinancing strategies for portfolios acquired together with the
associated debt.
Reason for admission
The Board believes that the listing will provide the Company
access to the widest and deepest pools of capital for its expansion
and financing ambitions. Furthermore, the REIT regime, which is the
dominant form of public investment in UK real estate and which
offers a tax efficient structure for investors, requires that the
shares of the Company be listed.
The Board considers that a listing on AIM should offer
shareholders appropriate levels of liquidity within a regulatory
environment where transactions, including share issues, can be
effected in a timely and cost effective way. In implementing the
investment strategy, share issues or share for share transactions
could be an important part of the Company's resources, providing
firepower for growth not available to private companies.
The net proceeds will be used for general corporate purposes
including the operational expenses of the business.
Dividend
The Board does not currently anticipate distributing a material
dividend until after the approval of the accounts for the year to
31 December 2016.
The Portfolio
The Board considers that the Portfolio offers investors access
to attractive geared returns from assets with secure, long term
income derived from tenants whose businesses offer global spread
and which have performed very well over many years, even through
the recent recession, demonstrating their strong defensive
qualities.
The Board considers these businesses to be particularly
attractive given their resilient trading through the recent
recession, the broad spread of their own sources of income and
profitability and the barriers to entry in their respective
markets.
Healthcare Portfolio
The healthcare portfolio comprises 20 private hospitals let to a
subsidiary of Ramsay Health Care Limited, the ASX listed Australian
private healthcare group, and one psychiatric hospital in London
let to Sweden's Capio healthcare group. The private hospitals let
to Ramsay comprise 96 per cent. of the Healthcare Portfolio rent
and open market value and approximately half of total Portfolio
rent and value.
The healthcare assets have been independently valued as at 30
April 2014 at GBP727.5 million and currently produce GBP47.8
million per annum of rental income. The rental income increases by
a minimum of 2.75 per cent. per annum throughout the lease term,
every May. Every five years, commencing in May 2017, the landlord
has the option to review the rent to the higher of 2.75 per cent.
per annum compound and open market rental value.
The unexpired lease term of all of the healthcare leases is 23
years and there are no break options in the leases.
Leisure Portfolio
The leisure portfolio comprises five well known visitor
attractions and two hotels, let to subsidiaries of Merlin
Entertainments Plc and guaranteed by Merlin Entertainments Plc
itself. The leisure assets are independently valued at GBP729.5
million as at 30 April 2014 and currently produce GBP44.6 million
per annum of rental income, estimated to increase to GBP45.8
million per annum assuming the same RPI uplift as estimated by the
independent valuers at 2.6 per cent. to April 2014 and taking the
German rents (12 per cent. of total leisure rents) at a constant
exchange rate of EUR1:GBP0.82.
The visitor attractions account for 88 per cent. and the hotels
account for 12 per cent. of leisure portfolio rents. The UK leisure
portfolio represents 88 per cent. of the leisure portfolio rental
income and 91 per cent. of leisure portfolio value, and comprises
Madame Tussauds on Baker Street, London; Alton Towers theme park;
Alton Towers hotel; Warwick Castle; and Thorpe Park. The German
assets comprise Heide Park theme park, the largest theme park in
northern Germany, and its associated hotel, in Soltau, Saxony.
The average unexpired lease term of the leisure assets is 28
years and there are no break options in the leases. The tenant has
two rights to renew these leases for 35 years at the end of each
term.
History and background
Since 2007, the Portfolio has been held in separate sub-groups
under common ownership by Prestbury 1 LP, a private investment
business established in July 2006 and managed by its general
partner, which is a wholly owned subsidiary of Prestbury.
The total return from the Portfolios from acquisition in
mid-2007 until the 30 April 2014 valuation equated to an average of
7.6 per cent. per annum whereas the IPD index over a similar period
from June 2007 to March 2014 equated to an average return of 1.1
per cent. per annum.
A flotation and conversion to REIT status has always been one of
the existing investors' preferred options for the Portfolio. All of
the existing investors or their affiliates have, as limited
partners in Prestbury 1 LP, been investors in the Portfolio since
its acquisition in 2007. The existing investors comprise entities
controlled by Prestbury Investment Holdings Limited (a company in
which Nick Leslau has a significant influence), Sir Tom Hunter's
West Coast Capital and a subsidiary of Lloyds Banking Group which
had been established to make equity investments, each of which
holds a 26.7 per cent. partnership interest, and three private
investors each with a 6.7 per cent. interest. The Existing
Investors wish to remain invested in the Portfolio at present and
have therefore ruled out a sale of the Portfolio. They consider
that the creation of a UK REIT structure to hold the assets,
enhance options for refinancing the secured debt and grow by way of
acquisition of additional long term income streams represents an
excellent holding structure for these assets.
The Board
Martin Moore(Independent Non-Executive Chairman)
Martin Moore, MRICS, is a chartered surveyor who served as the
CEO of M&G Real Estate Limited (previously Prudential Property
Investment Managers Limited) from 1996 to 2012. During that time,
he ran the team and was responsible for setting strategy that grew
the business in the UK and led to the establishment of platforms in
North America, Continental Europe and Asia. He retired as Chairman
of M&G Real Estate in 2013. He is a past President and board
member of the British Property Federation, a past Chairman of the
Investment Property Forum and was a Commissioner of The Crown
Estate for eight years to 2011. Today he is a senior adviser to KKR
and an independent non-executive director of MEPC Ltd, F&C
Commercial Property Trust Ltd and of the M&G Asia Property
Fund. Martin has been appointed as an independent Non-executive
Director of SEGRO plc with effect from 1 July 2014. He is also a
Commissioner of English Heritage and a Trustee of the Guildhall
School Trust.
Leslie Ferrar (Independent Non-Executive Director, Audit
Committee Chair)
Leslie Ferrar, 58, CVO, FCA, BSc, served as treasurer to TRH The
Prince of Wales and Duchess of Cornwall from January 2005 until
July 2012. She is currently non-executive Chairman of The Risk
Advisory Group, a non-executive Director of Penna Consulting Plc
and is a non-executive member of the HMRC Risk and Audit Committee
and a member of the Audit Committee for the Sovereign Grant. She is
a qualified Chartered Accountant and trained at KPMG where she was
appointed partner in 1988, a position she held for 17 years. During
that time she led the firm's international expatriate practice and
was a member of the international board that ran the global tax
practice.
Jonathan Lane (Independent Non-executive Director, Chairman of
the Nominations Committee)
Jonathan Lane, 56, MA, is a Senior Adviser to Morgan Stanley and
Chairman of EMEA Real Estate Investment Banking (REIB). He joined
Morgan Stanley in 1999 where he served as Managing Director and
co-head of REIB. Jonathan has been a non-executive director of real
estate group Songbird Estates Plc since August 2008, a
non-executive director of Grosvenor Liverpool Limited since 2009
and on the Advisory Board of Resolution Property Advisors since
2010. He is a member of the Policy Committee of the British
Property Federation, a member of the Bank of England's Commercial
Property Forum and was formerly a member of the UK Government's
Property Unit Advisory Panel. He holds a masters degree in
Biochemistry from the University of Oxford and is a member of the
Advisory Board of the University's Oxford Programme for the Future
of Cities.
Ian Marcus (Independent Non-executive Director, Senior
Independent Director, Chairman of the Remuneration Committee)
Ian Marcus, 55, MA, FRICS, is Chairman of the Bank of England's
Commercial Property Forum. He joined Credit Suisse in 1999 to
establish the Real Estate Group and became Managing Director and
Chairman of its European Real Estate Investment Banking division.
He was responsible for leading the bank's property related
activities across its asset management, private banking and
investment banking businesses. Ian is also a member of the Real
Estate Advisory Board of the Department of Land Economy at the
University of Cambridge, a Senior Adviser to Eastdil Secured and
Wells Fargo Securities, Chairman of The Prince's Regeneration Trust
and a member of Redevco's Advisory Board. He is past president of
the British Property Federation, a past Chairman of the Investment
Property Forum and has been a Non-Executive Director of The Crown
Estate since January 2012.
Nick Leslau
Nick Leslau, 54, BSc (Hons) Est Man, FRICS, is the Chairman of
Prestbury Investments LLP and will be a Non-executive Director of
the Company. He is a chartered surveyor who has been Chairman and
Chief Executive of Prestbury Investment Holdings Limited since it
commenced business in October 2000 and Chairman of Prestbury
Investments LLP since its establishment in 2006. He was Chief
Executive of Burford Holdings Plc for approximately ten years,
during which period the company delivered some 34 per cent. per
annum compound NAV per share growth. After his resignation from the
board of Burford in 1997, he became Group Chairman and Chief
Executive of Prestbury Group Plc on 1 January 1998. He has sat on
many quoted and unquoted company boards including, most recently,
Max Property Group Plc, and is a Member of the Bank of England
Property Forum.
Mike Brown
Mike Brown, 53, BSc (Land Man) MRICS, is Chief Executive Officer
of Prestbury Investments LLP and will be a Non-executive Director
of the Company. A chartered surveyor with over 30 years'
experience, he joined Prestbury in 2009, at the time of the
flotation of Max Property Group Plc, a limited life opportunity
fund which came to the end of its investment period on 27 May 2014.
Previously he was a deputy Chief Executive of Helical Bar Plc and a
board member of the Investment Property Forum. Helical Bar plc was
one of the best performing companies in the quoted real estate
sector from 1998 to 2009 and Mike was responsible for all of
Helical Bar's investment and trading activities during this time.
From 1992 to 1997 he was a director of Threadneedle Property Fund
Managers, running its then largest fund.
Sandy Gumm
Sandy Gumm, 47, BEc, CA (Australia) is Prestbury's Chief
Operating Officer and will be a Non-executive Director of the
Company. She is an Australian-qualified chartered accountant of
over 23 years' standing. She trained at KPMG in Sydney and worked
for nine years at KPMG in Sydney and London, leaving to become
Group Financial Controller of Burford Holdings Plc in December
1995. She was appointed Finance Director of Prestbury Group Plc on
2 December 1997. She was Finance Director of Prestbury Investment
Holdings Limited when it commenced business in October 2000 until 5
July 2007 when she was appointed Chief Operating Officer.
NOTES TO EDITORS
The real estate assets of the Group comprise the healthcare
portfolio and the leisure portfolio. The Portfolio valuation is
analysed between the two portfolios as follows:
Healthcare Leisure Total
--------- -------------------------------- -------------------------------- ----------------------------------
Net Yield Net Yield Net Yield
Initial at July Initial at July Initial at July
Yield '14 Value Yield '14 Value Yield '14 Value
--------- --------- --------- ---------- --------- --------- ---------- --------- --------- ------------
London
Assets 5.1% 5.25% GBP32.7m 5.0% 5.1% GBP286.7m 5.0% 5.1% GBP319.4m
--------- --------- --------- ---------- --------- --------- ---------- --------- --------- ------------
Rest of
UK 6.1% 6.25% GBP694.8m 6.1% 6.3% GBP376.5m 6.1% 6.25% GBP1,071.3m
--------- --------- --------- ---------- --------- --------- ---------- --------- --------- ------------
Germany - - - 7.3% 7.5% GBP66.3m 7.3% 7.5% GBP66.3m
--------- --------- --------- ---------- --------- --------- ---------- --------- --------- ------------
Total 6.0% 6.2% GBP727.5m 5.8% 5.9% GBP729.5m 5.9% 6.1% GBP1,457.0m
--------- --------- --------- ---------- --------- --------- ---------- --------- --------- ------------
The July 2014 yields are calculated on the basis of the rents
following the completion of the 2014 rental uplift cycle. These are
fixed at 2.75 per cent. for healthcare on 3 May 2014 and 3.34 per
cent. for German leisure assets on 30 July 2014. The UK leisure
reviews occur on 25 June 2014 and are linked to RPI uplifts from
April 2013 to April 2014, which CBRE have assumed for the purposes
of their valuation to be 2.6 per cent., using Oxford Economics as a
source for this estimate of RPI.
Over half of the Group's assets by value are in London and the
South East.
Location Healthcare Leisure Total
----------------------- ----------- -------- ------
London 5% 39% 22%
----------------------- ----------- -------- ------
South East 49% 17% 33%
----------------------- ----------- -------- ------
London and South East 54% 56% 55%
----------------------- ----------- -------- ------
Rest of UK 46% 35% 41%
----------------------- ----------- -------- ------
Total UK 100% 91% 96%
----------------------- ----------- -------- ------
Germany - 9% 4%
----------------------- ----------- -------- ------
Disclaimer:
This document is issued by Secure Income REIT Plc and relates
only to shares issued by it. This document does not constitute or
form part of, and should not be construed as, an offer or
inducement to engage in any investment activity. Past performance
cannot be relied on as a guide to future performance.
The distribution of this document and the offer of the Shares in
certain jurisdictions may be restricted by law. Accordingly,
neither this announcement nor the Admission Document nor any other
offering material may be distributed or published in any
jurisdiction except under circumstances that will result in
compliance with any applicable laws and regulations. Any failure to
comply with these restrictions may constitute a violation of the
securities law of any such jurisdictions.
This document does not constitute an offer to sell, or the
solicitation of an offer to subscribe for or buy, Shares in any
jurisdiction and is not for distribution in or into the United
States, Australia, Canada, the Republic of South Africa or Japan.
In particular, the Shares have not been and will not be registered
under the Securities Act, under the applicable state securities
laws of the United States or under the applicable securities laws
of Australia, Canada, the Republic of South Africa or Japan and,
subject to certain exceptions, may not be offered or sold directly,
or indirectly, in or into the United States, Australia, Canada, the
Republic of Ireland, the Republic of South Africa or Japan, or to
or for the account or benefit of US Persons, or any person resident
in Australia, Canada, the Republic of South Africa or Japan.
This document includes statements that are, or may be deemed to
be, forward-looking statements. These forward-looking statements
can be identified by the use of forward-looking terminology,
including the terms "believes", "estimates", "anticipates",
"expects", "intends", "may", "will "or"should" or, in each case,
their negative or other variations or comparable terminology. By
their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual investment performance, results
of operations, financial condition, liquidity, dividend policy and
the development of its strategies may differ materially from the
impression created by the forward-looking statements contained in
this document.
The information in this announcement speaks only as at the date
of this announcement. Subject to its legal and regulatory
obligations (including under the AIM Rules), the Company expressly
disclaims any obligations to update or revise any statement
contained herein.
Oriel Securities, which is regulated by the FCA, is acting as
broker and nominated adviser to the Company and for no one else in
connection with the matters described herein. Its responsibilities
as the Company's nominated adviser under the AIM Rules are owed
solely to London Stock Exchange plc and are not owed to the Company
or to any Director or to any other person in respect of any
decision to acquire shares in the Company. Oriel Securities is
acting for the Company in relation to Admission and the Placing and
no one else and will not be responsible to anyone other than the
Company for providing the protections afforded to its clients, nor
for providing advice in relation to Admission or the Placing, the
contents of this announcement or any transaction or arrangement
referred to herein. Apart from the responsibilities and liabilities
if any, which may be imposed on Oriel Securities by the FSMA or the
regulatory regime established thereunder, Oriel Securities does not
accept any responsibility whatsoever for the contents of this
announcement (or the omission of any information in it) or for any
other statement made or purported to be made by it, or on its
behalf, in connection with the Company, the Shares or the Placing.
Oriel Securities accordingly disclaims all and any liability
whether arising in tort, contract or otherwise (to the fullest
extent permissible by law and save as referred to above), which it
might otherwise have in respect of this announcement or any such
statement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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