TIDMSIR
RNS Number : 2289H
Secure Income REIT PLC
09 March 2018
THIS ANNOUNCEMENT (INCLUDING THE APPICES) AND THE INFORMATION
CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION
OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN,
INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH
AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION
OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR IMMEDIATE
RELEASE.
9 March 2018
Secure Income REIT Plc
(the "Company" and together with its subsidiaries the
"Group")
GBP436 MILLION ACQUISITIONS
GBP315.5 MILLION PLACING OF ORDINARY SHARES
The board of directors of Secure Income REIT Plc (AIM: SIR), the
specialist long term income REIT, announces that contracts have
been exchanged to acquire two substantial off-market portfolios at
a total cost of GBP436 million.
The Acquisitions meet the Company's strict investment criteria
established at its IPO in June 2014 and will be significantly
dividend accretive, will materially deleverage the Group's balance
sheet and will reduce the Group's weighted average cost of debt,
while also maintaining the Group's very long weighted average
unexpired lease term. The Acquisitions have the secure long-term
inflation protected income that is at the core of the Company's
business, and they also present a number of value enhancing
opportunities through asset management.
The Board believes that the principal benefits of the proposed
Acquisitions, Placing and associated new debt financing are
expected to be:
-- Increase in dividends per Ordinary Share with the
post-acquisition dividend expected to yield 4.3% on the Placing
Price
-- Net LTV to reduce to 45.8%, from 49.6% at 31 December 2017
-- Weighted average unexpired lease term remains very long at 21.7 years with no breaks
-- Leases provide long term inflation protection:
o the proportion of the Group's rents subject to upwards only
RPI reviews increased to 51% from 42%
o 48% of rents subject to fixed uplifts with the remaining 1%
subject to upwards only open market reviews
o 70% of the Group's rents will be subject to annual rent
reviews (as opposed to five yearly)
-- Further diversification by income and asset base across
defensive sectors: number of properties will increase to 177 from
81
-- The Acquisitions offer a number of value enhancing asset management opportunities
-- EPRA NAV to increase to GBP1.2 billion on a pro forma basis
-- On the basis of the Company's Base Case Assumptions, the
illustrative five year compounded dividend growth rate of the
Enlarged Group is expected to be 5.6% per annum
To part finance the Acquisitions, the Company is proposing a
Placing to institutional investors of up to 86.4 million new
Ordinary Shares in the Company targeting gross proceeds of up to
GBP315.5 million.
The Placing Price will be 365 pence per Placing Share, equal to
the 31 December 2017 EPRA NAV per share adjusted for the completion
of the Transaction. The balance of the consideration for the
Acquisitions will be funded by two new non-recourse debt facilities
expected to total GBP128.7 million (approximately 30% Loan to Cost)
for which the Group has obtained credit approved terms.
The Board and Prestbury Management Team will be investing
GBP5.25 million at the Placing Price. Following completion of the
Transaction, the Prestbury Management Team will hold a total post
Transaction shareholding in the Company of approximately GBP158
million at the Placing Price, one of the largest management
shareholdings in the quoted UK real estate sector and maintaining
their strong alignment with Shareholders.
The Company has separately announced today its annual results
for the year ended 31 December 2017, which exclude any adjustments
for the Transaction, in which the Company's:
-- EPRA NAV per Ordinary Share at 31 December 2017 is 370.4
pence per Ordinary Share, up 14.5% since 31 December 2016; and
-- Adjusted EPRA EPS is 13.6 pence, up 20.4% year on year.
Full details of the 2017 annual results are available in the
Company's preliminary results announcement which is available in
the Investor Centre at www.SecureIncomeREIT.co.uk.
TRANSACTION HIGHLIGHTS
The two portfolios have a gross purchase cost of GBP436 million
and comprise:
-- a portfolio of leisure assets across the UK with a gross cost
of GBP224 million representing a net initial yield of 5.9% and with
a weighted average unexpired lease term of 18.0 years,
comprising:
o Manchester Arena: A strategic 8-acre site on top of Manchester
Victoria station, close to prime retail, restaurants, other leisure
venues and the NOMA regeneration scheme. The site includes the UK's
largest indoor arena by capacity, at 21,000 seats, which is let for
27 years to SMG (the world's largest venue management company) as
well as 160,000 sq.ft. of office and additional leisure space, a
1,000 space multi-storey car park and advertising hoardings;
o The Brewery at Chiswell Street, London EC1: the largest
catered events space in the City of London;
o a portfolio of 17 hotels let to Travelodge Hotels Limited, the
UK's largest independent value branded hotels group; and
o a portfolio of 18 freehold high street pubs let to or
guaranteed by Stonegate Pub Company Limited. Stonegate is one of
the UK's largest privately managed pub operators.
-- a portfolio of 59 hotels across the UK let to Travelodge at a
gross cost of GBP212 million representing a net initial yield of
6.1% and with a weighted average unexpired lease term of 23.5
years.
The Transaction has been recently discussed in principle with a
number of the Company's larger shareholders and with potential new
investors, and the Board has been very encouraged by the positive
feedback and indications of support received.
NOTICE OF GENERAL MEETING
Completion of the Placing requires the approval of Shareholders
to give the Board authority to issue the Placing Shares and to
disapply pre-emption rights in connection with the issue of such
Placing Shares. Accordingly, the Company has today published a
Circular providing notice to convene a General Meeting to be held
at Cavendish House, 18 Cavendish Square, London W1G 0PJ at 2.30
p.m. on 27 March 2018. The Circular is available in the Investor
Centre of the Company's website at www.SecureIncomeREIT.co.uk.
The Board unanimously considers that the Placing and the
Resolutions to be proposed at the General Meeting are in the best
interests of the Company and its Shareholders as a whole.
Accordingly, the Board unanimously recommends that Shareholders
vote in favour of the Resolutions to be proposed at the General
Meeting, as the Directors intend to do in relation to their own and
associated holdings of 42,285,326 Ordinary Shares in total,
representing approximately 18% of the Existing Ordinary Share
Capital.
DETAILS OF THE PROPOSED PLACING
The Company is proposing to issue up to 86,438,000 Placing
Shares, representing 36.8% of the Company's Existing Ordinary Share
Capital, at the Placing Price of 365.0 pence per Ordinary Share, to
raise gross proceeds of up to GBP315.5 million. The Placing Price
reflects the 31 December 2017 EPRA NAV per Ordinary Share adjusted
for the completion of the Transaction, as shown in Appendix I.
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM. It is expected
that Admission will become effective and that unconditional
dealings in the Placing Shares will commence at 8.00 a.m. London
time on 29 March 2018.
The Placing will be subject to the terms and conditions set out
in Appendix VI of this Announcement, which forms part of this
Announcement. Subscribers for Placing Shares will be deemed to have
read and understood this Announcement in its entirety (including
all Appendices) and to be making an offer on the terms and
conditions, and providing the representations, warranties,
acknowledgements and undertakings contained in Appendix VI.
Stifel has entered into a Placing Agreement with the Company and
Prestbury Investments LLP under which, subject to the conditions
set out therein, Stifel will use reasonable endeavours to procure
subscribers for the Placing Shares. The Placing is conditional on
the Placing Agreement becoming wholly unconditional (save as to
Admission) and not having been terminated in accordance with its
terms prior to Admission.
Stifel is acting as sole bookrunner in respect of the Placing.
Eligible investors should communicate their firm interest to their
usual sales contact at Stifel, providing a clear indication of the
number of Placing Shares which such investor wishes to subscribe
for under the Placing.
The Placing Shares will, when issued, be credited as fully paid
and will rank pari passu in all respects with the existing Ordinary
Shares in the Company, including the right to receive all dividends
and other distributions declared, made or paid after the date of
issue. Based on the current expected timetable, the Placing Shares
will therefore qualify for the next quarterly dividend which is
expected to be declared in May 2018. Any dividend increase arising
from the Acquisitions is not expected to occur until the
Acquisitions have completed with the first increased dividend
therefore expected to be declared in August 2018.
The Placing Shares will be issued in registered form and may be
held in uncertificated form. The Placing Shares allocated will be
issued to Placees through the CREST system unless otherwise stated.
The Placing Shares will be eligible for settlement through CREST
with effect from Admission.
The number of Placing Shares to be issued will be agreed between
Stifel and the Company, following completion of the Bookbuild. In
the event that the number of Placing Shares applied for under the
Placing exceeds 86,438,000, it may be necessary to scale back
applications under the Placing. In such event, the Placing Shares
will be allocated at the discretion of the Company in consultation
with Stifel.
Each Acquisition is conditional on the Placing which is not
underwritten. The Company believes that both portfolios are
compelling investment propositions and therefore in the event that
the gross proceeds of the Placing total less than GBP315.5 million,
then the Company would still aim to complete both Acquisitions,
using the proceeds of the Placing as well as existing resources
available to the Group. In these circumstances the returns profile
of the Group, as based on the Base Case Assumptions, would change
from that illustrated in this Announcement (such changes are
illustrated in Appendix IV).
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Announcement of the Placing and 9 March 2018
the Acquisitions
Latest time and date for receipt 11.30 a.m. on
of Placing commitments 26 March 2018
General Meeting 2.30 p.m. on
27 March 2018
Results of the General Meeting 27 March 2018
and Placing announced
Admission and commencement of 8.00 a.m. on
dealings in the Placing Shares 29 March 2018
Placing Shares issued in uncertificated 29 March 2018
form expected to be credited
to accounts in CREST
Despatch of definitive share As soon as possible
certificates for the Placing after 29 March
Shares issued in certificated 2018
form (if applicable)
Latest date of completion of 30 May 2018
the Hotels Portfolio acquisition
Latest date of completion of 2 July 2018
the Leisure Portfolio acquisition
Each of the times and dates in the above timetable is subject to
change. If any of the above times and/or dates change, the revised
times and/or dates will be notified to Shareholders by announcement
through a Regulatory Information Service. References to time in
this document are to London time. The timetable above assumes that
the Resolutions are passed at the General Meeting without
adjournment.
The Board notes the encouraging feedback from discussions with
larger Shareholders prior to this Announcement and will actively
consider closing the Bookbuild in advance of 26 March 2018. The
Board is also conscious that some investors require a longer period
of time to make investment decisions and accordingly, in order to
not disadvantage these investors, does not expect to close the
Bookbuild before 11.00 a.m. on 16 March 2018. Interested investors
should be aware of the potential for an earlier close and therefore
are encouraged to submit orders as early as possible into the
Bookbuild.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Secure Income REIT Plc +44 20 7647
Nick Leslau 7647
Mike Brown enquiries@SecureIncomeREIT.co.uk
Sandy Gumm
Stifel Nicolaus Europe Limited +44 20 7710
(Nominated Adviser & Sole Bookrunner) 7600
Mark Young stifelsecureincomereit@stifel.com
David Arch
Tom Yeadon
Newgate (PR Adviser) +44 20 7680
James Benjamin 6550
Anna Geffert sir@newgatecomms.com
Leena Patel
This Announcement, the preliminary results announcement and the
related shareholder presentation are available on the Company's
website, www.SecureIncomeREIT.co.uk
Capitalised terms in this Announcement have the meaning given to
them in Appendix V
The Company's LEI is: 213800M1VI451RU17H40
Appendix I
Further INFORMATION ON THE GROUP AND THE TRANSACTION
Against a backdrop of a significant reduction in income security
in the UK real estate market, caused by a marked decline in the
average term to first tenant lease break or expiry, and mindful of
the growing requirement amongst investors for long term, secure
income flows, the Board aims to further build on the Group's
Existing Portfolio of key operating assets to create a substantial
diversified long term income portfolio providing stable and growing
income and capital returns for its Shareholders. The Board defines
a long term income stream as one with a weighted average term to
maturity in excess of 15 years at the time of acquisition, and
income security is assessed by reference either to the financial
strength of the tenants or to the extent of asset cover provided by
way of residual asset value.
The Board believes that the Company offers attractive geared
returns from high quality real estate, with financially strong
tenants operating with well established brands in industry sectors
with strong defensive characteristics. An important characteristic
of the Company is that portfolio assets are Key Operating Assets,
that is assets that are business critical from the tenant's
perspective. In this way, rental security is more certain as the
asset in question forms an essential part of the value of the
tenant's own business and strategy.
The Board's intention is for the Company to continue to hold a
diversified portfolio of long term, secure income streams from real
estate investments across a range of defensive property sectors,
enhancing prospects for attractive total returns through earnings
accretive acquisitions.
The Board's stated intention is to seek further acquisition
opportunities, exercising strong capital discipline, issuing equity
that is accretive to Shareholder returns and using debt prudently
to enhance returns for Shareholders. The Board considers that the
Acquisitions meet these criteria.
THE ACQUISITIONS
The Acquisitions consist of two off-market transactions, the
Leisure Portfolio and the Hotels Portfolio. Contracts for each
portfolio were exchanged on 8 March 2018 with an aggregate gross
purchase cost of GBP436 million. Each contract is conditional only
on the Placing. At exchange, a total of GBP11 million of
non-refundable deposits was transferred to the vendors for these
transactions.
1) Leisure Portfolio
The portfolio consists of 37 assets with a weighted average
unexpired lease term of 18.0 years. The gross cost of GBP224
million reflects a net initial yield of 5.9%.
72% of portfolio rents are subject to upwards only RPI linked
rent reviews; 26% have fixed uplifts and 2% are subject to upwards
only open market rent reviews. The Company will acquire these
assets either directly or through underlying unit trusts.
The portfolio comprises:
-- Manchester Arena: The asset is held long leasehold and is a
strategic eight acre site on top of Manchester Victoria station,
close to prime retail, restaurants, other leisure venues and the
NOMA regeneration scheme. It comprises the Arena and 160,000 sq.ft.
of additional office and leisure space together with a 1,000 space
multi-storey car park and advertising hoardings. The investment
produces GBP5.75 million net income per annum, contracted to rise
to over GBP6 million per annum on expiry of a lease incentive and
following the next rental uplift on the Arena lease in June 2018.
This investment has a weighted average unexpired lease term of 18.0
years. The Arena is let for 27 years to SMG, the world's largest
venue management company and is the UK's largest indoor arena with
a capacity of 21,000, attracting over one million visitors each
year. The SMG lease is subject to annual RPI reviews collared at 2%
to 5% and has a current passing rent of GBP3.68 million. SMG
operates some 200 venues globally, holds approximately 33,000
events per annum and has achieved 25 years of annual EBITDA growth.
The offices and additional leisure space are let to tenants
including Serco, Manchester City Council, Unison, JC Decaux and
go-karting operator Teamsport with a combined passing rent of
GBP2.71 million per annum.
-- The Brewery at Chiswell Street: A predominantly freehold
investment let to a specialist venue operator until July 2031 at
GBP3.4 million per annum with five-yearly fixed uplifts at 2.5% per
annum compound. The Brewery is the largest catered events space in
the City of London, strategically located close to Moorgate
station.
-- Stonegate Pubs: 18 freehold pubs let to, or guaranteed by,
Stonegate Pub Company Limited, one of the UK's largest privately
managed pub companies. The portfolio produces GBP1.96 million per
annum of rental income and has a weighted average unexpired lease
term of c.22 years with five yearly RPI linked rental increases
collared at 1% to 4%. The average lot size is c.GBP2 million.
-- 17 Travelodge hotels: The Leisure portfolio includes 17
Travelodge Hotels. Further details of these hotels are included
within the Hotels Portfolio details outlined below, as the two
hotels portfolios have the same tenant and will be financed
together.
All of the occupational leases in the Leisure portfolio are on
full repairing and insuring terms.
The Board and Prestbury Management Team have identified
opportunities to create further value from asset management
initiatives in the Leisure portfolio.
2) Hotels Portfolio acquisition
The Hotels Portfolio consists of 59 hotels let to Travelodge.
The gross cost of GBP212 million reflects a net initial yield of
6.1%. The assets are individually leased on full repairing and
insuring terms for a weighted average unexpired term of 23.5 years
with all the leases subject to uncapped upwards only RPI
reviews.
Travelodge is owned by a consortium of investors comprising
GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs
Group along with certain members of the Travelodge management team
holding 10.4% of the Company via its equity incentive programme.
GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs
Group, through a structure separate to the ownership of the
Travelodge business, are the ultimate vendors of the Hotels
Portfolio which will be acquired by the Company through the
acquisition of unit trusts which in turn own the properties.
Together with the hotels within the Leisure portfolio, the
Acquisitions include 76 Travelodge Hotels at a cost of GBP246
million and with a weighted average unexpired lease term of 23
years. Passing rent totals GBP15 million per annum and is subject
to five-yearly uncapped upwards only RPI increases. 50% by value of
the Travelodge hotels are in 17 locations including Bath,
Birmingham, Dartford, Heathrow Heston, London Morden, London Park
Royal and Reading, with an average lot size of GBP7 million. The
average lot size of the remaining 50% by value is GBP2 million. 58%
of the hotels by value are held freehold, 28% are long leasehold
and the remaining 14% is short leasehold. Together with the
Travelodge hotels in the Existing Portfolio, the Board and
Prestbury Management Team consider that there are opportunities for
portfolio rationalisation and asset management opportunities.
Travelodge is the second largest UK hotel brand with over 42,000
rooms, approximately 19 million customers and EBITDA of GBP112.4
million in the year to 31 December 2017. The Board and Prestbury
Management Team's assessment of the value branded (or budget)
hotels sector is that it represents a defensive sector with good
growth prospects, making it a desirable sub-sector for the Group to
invest in.
THE ENLARGED PORTFOLIO
The Existing Portfolio of 81 healthcare and leisure assets was
externally valued as at 31 December 2017 at GBP1.77 billion.
Including the Acquisitions at their aggregate cost (which includes
purchase costs) of GBP436 million would result in an Enlarged
Portfolio of 177 assets and a pro forma portfolio value of GBP2.21
billion.
Key statistics for the Enlarged Portfolio
-- 51% subject to rent reviews linked to RPI (being 26% on a
five-yearly review pattern, 1% on a three yearly review pattern and
25% reviewed annually), 48% of rents subject to fixed uplifts
(comprising 45% with fixed annual uplifts and 3% with a five-yearly
uplift pattern), and 1% subject to five yearly open market
reviews.
-- Long weighted average unexpired lease term of 21.7 years
-- Contracted rental income of GBP122.5 million per annum with a
running yield in July 2018 following the next annual reviews on the
Existing Portfolio and the Arena expected to be 5.3%
-- Valuation (Acquisitions at cost) by type:
o Healthcare 43%
--------------------- ----
o Theme Parks 22%
--------------------- ----
o Travelodge Hotels 21%
--------------------- ----
o Theme Park Hotels 5%
--------------------- ----
o Manchester Arena 5%
--------------------- ----
o The Brewery 3%
--------------------- ----
o Stonegate Pubs 1%
--------------------- ----
-- July 2018 running yields by sub-sector:
o Stonegate Pubs 6.6%
---------------------------- -----
o The Brewery 6.1%
---------------------------- -----
o Hotels 5.9%
---------------------------- -----
o Manchester Arena 5.6%
---------------------------- -----
o Theme Parks (incl. Theme
Park Hotels) 5.3%
---------------------------- -----
o Healthcare 5.0%
---------------------------- -----
-- Weighted average unexpired lease term by sub-sector:
o Theme Parks (incl. Theme 24.4 years
Park Hotels)
--------------------------- -----------
o Hotels 24.2 years
--------------------------- -----------
o Stonegate Pubs 21.9 years
--------------------------- -----------
o Healthcare 19.5 years
--------------------------- -----------
o Manchester Arena 17.9 years
--------------------------- -----------
o The Brewery 13.3 years
--------------------------- -----------
FINANCIAL IMPACT OF THE TRANSACTION
Increase in expected shareholder returns
The incremental net income from the Acquisitions will enhance
both the Company's dividend yield and potential for capital growth,
and therefore Total Shareholder Returns. The Company's dividend
policy is to make quarterly cash distributions to Shareholders
equal to the higher of the minimum REIT distribution or one times
Adjusted EPRA EPS. Consistent with this policy, following
completion of the Transaction and the next scheduled rental uplifts
on the Existing Portfolio, the Board expects to increase
distributions to an annualised 15.7 pence per Ordinary Share from a
current annualised 14.0 pence per Ordinary Share, with the record
date for the first increased dividend expected to be in the third
quarter of 2018. This equates to a dividend yield of 4.3% on the
Placing Price.
On the basis of the Base Case Assumptions the illustrative five
year compounded dividend growth rate is expected to be 5.6% per
annum.
The expected rate of growth in the Company's dividend can be
sensitised across a range of RPI scenarios. On the basis of the
Base Case Assumptions in Appendix IV, the Company would deliver a
minimum compound annual dividend growth rate of 3.3% if there is
zero or negative RPI throughout the period, and this would increase
to 6.3% if the RPI outcome is 100 basis points higher than
suggested by the base case RPI swap curve.
In addition to offering a fully covered, quarterly cash
dividend, the Company also offers Shareholders capital growth. On
the Base Case Assumptions, the illustrative Total Accounting Return
over five years following completion of the Transaction is
approximately 10% per annum. By the end of that period, also on the
Base Case Assumptions, the Group's Net LTV is expected to be
approximately 38%.
New secured credit facilities
The Company has agreed credit approved terms for two separate
secured debt facilities totalling GBP128.7 million to be obtained
from funds managed by M&G Real Estate and from HSBC following
strong interest from major clearing banks and institutions in a
competitive process. The Company is in the process of documenting
the facility agreements and satisfying the lenders' due diligence
requirements and conditions precedent.
The facilities are bilateral, secured, non-recourse facilities
with substantial covenant headroom and with cash cure rights to
protect the Group's capital. Each loan is separate from all other
Group loans, with a GBP68.7 million facility financing all of the
Hotels and GBP60.0 million secured on the Leisure Portfolio
excluding the hotels. The two facilities will not be cross
collateralised and there is no recourse to other Group assets
outside the ring-fenced structures within which the assets of each
portfolio will be held.
The facilities are both floating rate facilities. The interest
rate risk will be managed by way of interest rate hedging to ensure
that the vast majority of the Group's interest cost is effectively
fixed. There are prepayment fees on a reducing scale over the first
three years of the facilities but, on GBP80 million of the GBP128.7
million of facilities, there are no 'make whole' payments in the
event of early repayment. That, and the five year term to maturity
of each facility, is designed to help facilitate the Group's
intention to move away from bilateral secured debt and to access
wider debt capital markets in due course.
The Transaction once completed, would have the effect of
creating an immediate reduction in the Group's Net LTV from 49.6%
to 45.8% on a pro forma basis, with a weighted average term to
maturity of 6 years and a weighted average cost of 4.9% per
annum.
Pro forma financial profile
Assuming completion of the Transaction the Group's pro forma
EPRA NAV would be as follows:
31 Dec Hotels Leisure Equity Pro-forma
2017 Portfolio Portfolio Issue EPRA
NAV
--------------------- -------- ----------- ----------- --------- ----------
Investment property
(1) 1,770.2 210.0 219.0 2,199.2
--------------------- -------- ----------- ----------- --------- ----------
Gross debt (967.3) (68.7) (60.0) (1,096.0)
--------------------- -------- ----------- ----------- --------- ----------
Prepaid finance
fees 12.0 1.1 1.3 14.4
--------------------- -------- ----------- ----------- --------- ----------
Cash 89.1 (144.1) (165.6) 309.7(2) 89.1
--------------------- -------- ----------- ----------- --------- ----------
Other (33.2) (33.2)
--------------------- -------- ----------- ----------- --------- ----------
EPRA NAV 870.8 (1.7) (5.3) 309.7 1,173.6
--------------------- -------- ----------- ----------- --------- ----------
EPRA NAV per 370.4 365.0
Share (pence) (3) (4)
--------------------- -------- ----------- ----------- --------- ----------
The pro forma EPRA net asset value is presented on the basis
that the Hotels Portfolio and Leisure Portfolio are included at
their cost excluding costs of acquisition and on that basis GBP7.0
million of costs of acquisition have been charged to the income
statement.
1 External valuation of Existing Portfolio at 31 December 2017
(GBP/EUR exchange rate of EUR1:GBP0.8873) plus Acquisitions at cost
excluding purchase costs.
2 Equity issue proceeds shown net of costs.
3 Calculated on 230,536,874 Ordinary Shares in issue at 31 December 2017.
4 Calculated on the sum of (a) 230,536,874 Ordinary Shares
currently in issue, (b) 4,588,479 Ordinary Shares to be issued in
March 2018 and (c) 86,438,000 Ordinary Shares being the maximum
amount to be issued in the Placing.
Appendix II
Further information ON THE GROUP
The Company specialises in investing in long term, secure income
derived from real estate investments and offering inflation
protection without the restriction of a specific sector
specialisation. The Board believes that the Company's investment
strategy, which is designed to satisfy investors' growing demand
for high quality, safe, inflation protected income returns,
combined with the Company's tax efficient REIT status and carefully
managed capital structure, will allow it to produce attractive,
growing and sustainable total returns to Shareholders.
Since its listing in June 2014, the Company has delivered:
-- Total Accounting Returns of 26% per annum compound;
-- 27% per annum compound Total Accounting Returns since its
March 2016 secondary placing of equity; and
-- 26% per annum compound Total Accounting Returns since the
placing in October 2016 to acquire a GBP200 million portfolio.
PRESTBURY AND THE BOARD
The Company has an experienced non-executive Board, chaired by
Martin Moore and also comprising three further independent
Directors in Leslie Ferrar, Jonathan Lane and Ian Marcus, as well
as three members of the Prestbury team in Nick Leslau, Mike Brown
and Sandy Gumm.
The Investment Adviser to the Company is Prestbury Investments
LLP. The Prestbury executive team comprises Mike Brown, Tim Evans,
Sandy Gumm, Nick Leslau and Ben Walford, a group of property and
finance professionals who between them have over 130 years'
experience in the UK real estate market and have been one of the
most successful management teams in the quoted UK real estate
sector.
The Prestbury Management Team has an exceptionally close
alignment to the interests of the Company's Shareholders through
its very significant shareholding in the Company of approximately
GBP153.4 million of the Existing Ordinary Share Capital (at the
Placing Price). The team intends to invest a further GBP5.1 million
in the Placing. Its post Transaction shareholding is therefore
expected to amount to approximately GBP158.5 million at the Placing
Price, maintaining its position as one of the largest management
shareholdings in the quoted UK real estate sector.
Appendix iII
Illustrative returns
The returns of the Enlarged Portfolio can be illustrated as
follows on a range of valuation yields and RPI outcomes. The Base
Case Assumptions are explained Appendix IV.
Illustrative Total Accounting Return scenarios
(June 2018 to June 2023)
----------------------------------------------------------------
RPI Assumptions
-------------- ------------------------------------------------
Property RPI Curve Base Case RPI Curve Zero or
Valuation +1% RPI Curve -1% lower RPI
Yield (net)
relative
to Base
Case
-------------- ---------- ----------- ---------- -----------
- 50 bps 13.8% 13.2% 12.6% 11.3%
-------------- ---------- ----------- ---------- -----------
- 25 bps 12.4% 11.7% 11.0% 9.6%
-------------- ---------- ----------- ---------- -----------
Base Case 10.9% 10.2% 9.5% 8.0%
-------------- ---------- ----------- ---------- -----------
+ 25 bps 9.4% 8.6% 7.9% 6.4%
-------------- ---------- ----------- ---------- -----------
+50 bps 7.9% 7.2% 6.4% 4.9%
-------------- ---------- ----------- ---------- -----------
Note: There is no certainty that these estimated returns will be
achieved.
Appendix IV
Base Case Assumptions
The illustrative returns in this document are based on the
following assumptions:
-- The illustrative returns employ the RPI swap curve at 27
February 2018 averaging increases of 3.3% per annum over the
period
-- Constant property valuation yield at 31 December 2017
external valuation yields for the Existing Portfolio and 6.0% yield
on costs for the Acquisitions
-- Only fixed uplifts on Ramsay leases, ignoring potential
uplifts from further open market reviews
-- Other than the Leisure and Hotels Portfolios, no purchases or
sales of properties or lease variations. Acquisitions and Placing
assumed to close on 1 April 2018
-- Constant Euro exchange rate of EUR1:GBP0.8873 based on
December 2017 exchange rate used throughout illustrative periods.
Euro denominated EPRA net assets amount to c. 5.1% of Group EPRA
Net Asset Value at 31 December 2017 and an estimated c.3.8% on a
pro forma basis after the Transaction
-- Valuation yield shifts in sensitised valuation scenarios
occur on the last day of the calculation period
-- Expected cost of funds (five year interest rate swap rate) on
new debt facilities estimated to be 1.38% per annum before lenders'
margins. The actual rate will be fixed at drawdown
-- The Investment Advisory Agreement between the Company and
Prestbury expires in June 2022 with no renewal rights on either
side. The illustrative returns assume that the existing
arrangements continue beyond that date
-- In October 2022 the Group's existing leisure portfolio loan
facility matures. At that time the loan principal will be GBP372.5
million at the 31 December 2017 Euro exchange rate and the base
case property valuation at 31 December 2017 valuation yield and
Euro exchange rate is estimated at GBP702.3 million. The
illustrative returns assume that the existing loan continues on the
same terms
-- Pro forma EPRA NAV per Ordinary Share is calculated on the
basis of 230.54 million Ordinary Shares currently in issue, plus
4.6 million Ordinary Shares to be issued in March 2018 for the
incentive fee earned in respect of the above benchmark performance
in the 2017 financial year plus the maximum 86.4 million Ordinary
Shares available in the Placing
-- The Company receiving gross proceeds of GBP315.5 million from the Placing
The Placing is not underwritten and therefore in the event that
the gross proceeds of the Placing total less than GBP315.5 million,
then the Company would look to complete on both Acquisitions using
the proceeds of the Placing and existing resources available to the
Group. In these circumstances the illustrative returns in this
Announcement would change. By way of illustration, if gross
proceeds of GBP265 million were raised under the Placing and the
Company used existing cash and debt resources of GBP51 million, and
using the existing assumptions in this Appendix IV (save for the
Placing proceeds), the illustrative pro forma EPRA NAV on
completion of the Transaction would be 365 pence per Ordinary
Share, the LTV 48.1%, the base case annual Total Shareholder Return
over 5 years would be 10.55% whilst the expected dividend yield on
the Placing Price would be 4.49% and the dividend would be expected
to grow at a compound rate of 5.7% per annum over the five years
following completion of the Transaction. However, in the event that
additional cash and debt were to be used to part fund the
completion of the Acquisitions, the Board's intention would be to
selectively sell some assets over time in order to replenish the
cash balance and pay down additional debt.
Appendix V
Glossary of Terms
Acquisitions the proposed acquisition by the
Group of the Hotels Portfolio and
the Leisure Portfolio
------------------------- -------------------------------------------
Adjusted EPRA EPRA EPS adjusted to exclude the
EPS distorting effect of the smoothing
of fixed rental uplifts over the
entire term of the relevant leases,
and excluding material non-recurring
items
------------------------- -------------------------------------------
Admission admission of the Placing Shares
to trading on AIM becoming effective
in accordance with the AIM Rules
for Companies
------------------------- -------------------------------------------
AIM a market operated by the London
Stock Exchange
------------------------- -------------------------------------------
Announcement this announcement, including all
the Appendices
------------------------- -------------------------------------------
Base Case Assumptions the base case assumptions set out
in Appendix IV upon which illustrative
returns in this announcement are
based
------------------------- -------------------------------------------
Board the board of directors of the Company
------------------------- -------------------------------------------
Bookbuild the process by which Stifel will
determine demand for participation
in the Placing by Placees
------------------------- -------------------------------------------
Circular the circular posted to Shareholders
on 9 March 2018 convening the General
Meeting
------------------------- -------------------------------------------
Closing Date the date of Admission, expected
to be 29 March 2018
------------------------- -------------------------------------------
Enlarged Portfolio the Existing Portfolio, as enlarged
by the Leisure and Hotels Portfolios
------------------------- -------------------------------------------
Code has the meaning given in the Terms
and Conditions
------------------------- -------------------------------------------
CREST has the meaning given in the Terms
and Conditions
------------------------- -------------------------------------------
EEA European Economic Area
------------------------- -------------------------------------------
EPRA the European Public Real Estate
Association
------------------------- -------------------------------------------
EPRA EPS a measure of EPS designed by EPRA
to present underlying earnings
from core operating activities
------------------------- -------------------------------------------
EPRA NAV a measure of NAV designed by EPRA
to present the fair value of a
company on a long term basis, by
excluding items such as interest
rate derivatives that are held
for long term benefit, net of deferred
tax
------------------------- -------------------------------------------
ERISA has the meaning given in the Terms
and Conditions
------------------------- -------------------------------------------
EPS earnings per share, calculated
as the earnings for the period
after tax attributable to members
of the Company divided by the weighted
average number of shares in issue
in the period
------------------------- -------------------------------------------
Existing Ordinary means 235,125,353 Ordinary Shares,
Share Capital comprising 230,536,874 Ordinary
Shares currently in issue and 4,588,479
Ordinary Shares which will be issued
to the Investment Adviser in March
2018 in respect of the incentive
fee payable for performance over
the Company's 2017 financial year
------------------------- -------------------------------------------
Existing Portfolio the current portfolio of the Group
as at the date of this announcement
and as detailed in the Company's
preliminary results announcement
for the year ended 31 December
2017 issued on 9 March 2018
------------------------- -------------------------------------------
FCA the UK Financial Conduct Authority
------------------------- -------------------------------------------
Financial Promotion the Financial Services and Markets
Order Act 2000 (Financial Promotion)
Order 2005
------------------------- -------------------------------------------
FSMA the Financial Services and Markets
Act 2000, as amended
------------------------- -------------------------------------------
General Meeting the general meeting of the Company
to be held at Cavendish House,
18 Cavendish Square, London W1G
0PJ at 2.30 p.m. on 27 March 2018
(or any adjournment thereof)
------------------------- -------------------------------------------
Hotels Portfolio 59 hotels let to Travelodge Hotels
Limited
------------------------- -------------------------------------------
Hotels Portfolio the unit purchase agreement dated
Purchase Agreement 8 March 2018 between (i) SIR Unitholder
3 Limited and SIR Unitholder 4
Limited, (ii) Grove Asset 2 S.A.
R.L., Grove Asset 5 S.A. R.L.,
Grove Asset 13 S.A. R.L., Grove
Asset 14 S.A. R.L., Grove Asset
15 S.A. R.L. and Grove Second Unit
Holder S.A.R.L. and (iii) Grove
Finco S.A. R.L. in relation to
the acquisition by the Group of
the Hotels Portfolio
------------------------- -------------------------------------------
Investment Adviser Prestbury Investments LLP
------------------------- -------------------------------------------
Investment Advisory the agreement dated 30 May 2014
Agreement between, amongst others, the Company
and the Investment Adviser (as
amended and restated on 3 June
2015 and 2 March 2016)
------------------------- -------------------------------------------
Key Operating an asset where the operations conducted
Assets from the property are integral
to the tenant's business
------------------------- -------------------------------------------
Leisure and the Leisure Portfolio and the Hotels
Hotels Portfolios Portfolio
------------------------- -------------------------------------------
Leisure Portfolio Manchester Arena, 17 hotels let
to Travelodge Hotels Limited, The
Brewery at Chiswell Street, London
and 18 pubs let to or guaranteed
by Stonegate Pub Company Limited
------------------------- -------------------------------------------
Leisure Portfolio the unit purchase agreement dated
Purchase Agreement 8 March 2018 between (i) SIR Maple
1 Limited, SIR Maple 2 Limited,
SIR Maple 4 Limited and SIR Unitholder
5 Limited and (ii) MIF I GP Ltd
(as general partner of MIF I LP)
and MIF I Nominee Ltd
------------------------- -------------------------------------------
Leisure Properties the agreement for the sale of 18
Purchase Agreement properties dated 8 March 2018 between
(i) SIR Maple 3 Limited and (ii)
MIF-I Project S (GP) Limited (as
general partner of MIF-I Project
S LP) and MIF-I Project S Nominee
Limited
------------------------- -------------------------------------------
Loan to Cost loan to cost ratio, which is the
outstanding amount of a loan as
a percentage of the cost of the
assets on which it is secured
------------------------- -------------------------------------------
LTV or Loan loan to value ratio, which is the
to Value outstanding amount of a loan as
a percentage of property value
------------------------- -------------------------------------------
Market Abuse Regulation (EU) No 596/2014 of
Regulation the European Parliament and of
the Council of 16 April 2014 on
market abuse
------------------------- -------------------------------------------
MiFID II EU Directive 2014/65/EU on markets
in financial instruments, as amended
------------------------- -------------------------------------------
MiFID II Product the product governance requirements
Governance Requirements contained within: (a) MiFID II;
(b) Articles 9 and 10 of Commission
Delegated Directive (EU) 2017/593
supplementing MiFID II; and (c)
local implementing measures
------------------------- -------------------------------------------
net initial annualised net rents on investment
yield properties as a percentage of the
investment property valuation,
less purchaser's costs
------------------------- -------------------------------------------
Net LTV LTV calculated on the gross loan
amount, less cash balances
------------------------- -------------------------------------------
Ordinary Shares ordinary shares of 10 pence each
in the capital of the Company
------------------------- -------------------------------------------
Placees has the meaning given in the Terms
and Conditions
------------------------- -------------------------------------------
Placing the proposed placing to institutional
investors of up to 86,438,000 new
Ordinary Shares by Stifel on behalf
of the Company pursuant to the
Placing Agreement
------------------------- -------------------------------------------
Placing Agreement the agreement dated 9 March 2018
between the Company, the Investment
Adviser and Stifel relating to
the Placing
------------------------- -------------------------------------------
Placing Price the price at which the Placing
Shares are to be allotted and issued
pursuant to the Placing, being
365.0 pence per Placing Share
------------------------- -------------------------------------------
Placing Results the announcement following the
Announcement completion of the Bookbuild of
the results of the Placing to be
issued through a Regulatory Information
Service
------------------------- -------------------------------------------
Placing Shares up to 86,438,000 new Ordinary Shares
to be issued by the Company at
the Placing Price pursuant to the
Placing Agreement
------------------------- -------------------------------------------
Prestbury Management Prestbury Investments LLP together
Team with its associates
------------------------- -------------------------------------------
Prospectus Directive EU Prospectus Directive 2003/71/EC
(and amendments thereto, including
Directive 2010/73/EU) and includes
any relevant implementing directive
measure in any member state
------------------------- -------------------------------------------
QIB a qualified institutional buyer
within the meaning of Rule 144A
under the Securities Act
------------------------- -------------------------------------------
Qualified Investors has the meaning given in the Terms
and Conditions
------------------------- -------------------------------------------
Regulations has the meaning given in the Terms
and Conditions
------------------------- -------------------------------------------
Regulation S as defined under the Securities
Act
------------------------- -------------------------------------------
Relevant Persons has the meaning given in the Terms
and Conditions
------------------------- -------------------------------------------
Resolutions the resolutions to be proposed
at the General Meeting as set out
in the Circular
------------------------- -------------------------------------------
RPI the retail price index as published
monthly by the Office for National
Statistics
------------------------- -------------------------------------------
Running yield the anticipated net initial yield
at a future date, taking account
of any rent reviews in the intervening
period and taking the Existing
Portfolio at 31 December 2017 independent
valuation and Acquisitions at cost
------------------------- -------------------------------------------
Securities Act US Securities Act of 1933, as amended
------------------------- -------------------------------------------
Shareholders holders of existing Ordinary Shares
in the Company
------------------------- -------------------------------------------
Stifel Stifel Nicolaus Europe Limited
of 150 Cheapside, London EC2V 6ET
------------------------- -------------------------------------------
Target Market the Target Market Assessment conducted
Assessment by Stifel and the Company for the
purposes of the MiFID II Product
Governance Requirements, as further
detailed in the Important Notices
below
------------------------- -------------------------------------------
Terms and Conditions the Terms and Conditions of the
Placing set out in Appendix VI
------------------------- -------------------------------------------
Total Accounting the movement in EPRA NAV over a
Return period plus dividends paid in the
period, expressed as a percentage
of the EPRA NAV at the start of
the period
------------------------- -------------------------------------------
Total Shareholder the movement in share price over
Return a period plus dividends paid in
the period, expressed as a percentage
of the share price at the start
of the period
------------------------- -------------------------------------------
Transaction the proposed Acquisitions, the
Placing and the new debt financing
------------------------- -------------------------------------------
US Person a US person within the meaning
of Rule 902 of Regulation S
------------------------- -------------------------------------------
Appendix VI
Terms and conditions of the Placing
THE ANNOUNCEMENT, INCLUDING THESE APPICES AND THE INFORMATION
CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE
OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR
ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.
IMPORTANT INFORMATION ON THE PLACING
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THE ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN
THIS APPIX VI ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED
ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA
WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E)
OF THE PROSPECTUS DIRECTIVE; AND (B) IN THE UNITED KINGDOM,
QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL
EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN
ARTICLE 19(5) OF THE FINANCIAL PROMOTION ORDER; (II) ARE PERSONS
FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES,
UNINCORPORATED ASSOCIATIONS, ETC") OF THE FINANCIAL PROMOTION
ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY
COMMUNICATED (ALL SUCH PERSONS IN (A) AND (B) TOGETHER BEING
REFERRED TO AS "RELEVANT PERSONS"). THIS APPIX VI AND THE TERMS AND
CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY
PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THE
ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO.
ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPIX VI AND
THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY
TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT
PERSONS. THE ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR
SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO
THE UNITED STATES. THE PLACING 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 MAY NOT BE OFFERED, SOLD, TAKEN UP, RESOLD,
TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM
THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE
PLACING SHARES ARE BEING OFFERED AND SOLD (I) IN THE UNITED STATES
ONLY TO A LIMITED NUMBER OF QIBS AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IN A TRANSACTION NOT INVOLVING A
PUBLIC OFFERING AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION OF THE UNITED STATES; AND (II) OUTSIDE
THE UNITED STATES IN OFFSHORE TRANSACTIONS IN RELIANCE ON AND IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT. NO PUBLIC
OFFERING OF THE PLACING SHARES IS BEING MADE IN THE UNITED STATES,
THE UNITED KINGDOM OR ELSEWHERE. NO REPRESENTATION IS BEING MADE AS
TO THE AVAILABILITY OF ANY EXEMPTION UNDER THE SECURITIES ACT FOR
THE REOFFER, RESALE, PLEDGE OR TRANSFER OF THE PLACING SHARES.
NEITHER STIFEL NOR THE COMPANY MAKES ANY REPRESENTATION TO ANY
PLACEES REGARDING AN INVESTMENT IN THE SECURITIES REFERRED TO IN
THE ANNOUNCEMENT.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
TAX, FINANCIAL, BUSINESS AND RELATED ASPECTS OF A SUBSCRIPTION FOR
PLACING SHARES. THE DISTRIBUTION OF THIS ANNOUNCEMENT, ANY PART OF
IT OR ANY INFORMATION CONTAINED IN IT MAY BE RESTRICTED BY LAW IN
CERTAIN JURISDICTIONS, AND ANY PERSON INTO WHOSE POSSESSION THIS
ANNOUNCEMENT, ANY PART OF IT OR ANY INFORMATION CONTAINED IN IT
COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, SUCH
RESTRICTIONS.
Persons who are invited to and who choose to participate in the
Placing by making an oral or written offer to subscribe for Placing
Shares, including any individuals, funds or others on whose behalf
a commitment to acquire Placing Shares is given (the "Placees"),
will be deemed to have read and understood the Announcement in its
entirety and to be making such offer on the terms and conditions,
and to be providing the representations, warranties,
acknowledgements, undertakings and agreements, contained in this
Appendix VI. In particular, each such Placee represents, warrants
and acknowledges to Stifel and the Company that:
1. it is a Relevant Person and undertakes that it will acquire,
hold, manage or dispose of any Placing Shares that are allocated to
it for the purposes of its business;
2. in the case of a Relevant Person in a relevant member state
of the EEA who acquires any Placing Shares pursuant to the
Placing:
(a) it is a Qualified Investor; and
(b) if it is a financial intermediary, as that term is used in
Article 3(2) of the Prospectus Directive, any Placing Shares
acquired by it in the Placing will not be acquired on a
non-discretionary basis on behalf of, nor will they be acquired
with a view to their offer or resale to, persons in circumstances
which may give rise to an offer of securities to the public other
than an offer or resale in a member state of the EEA which has
implemented the Prospectus Directive to Qualified Investors, or in
circumstances in which the prior consent of Stifel has been given
to each such proposed offer or resale;
3. it (and any account referred to in paragraph 4 below) is either:
(a) not a US person within the meaning of Rule 902 of Regulation
S and is located outside the United States at the time of receiving
the Announcement and will not be in the United States at the time
it subscribes for Placing Shares; or
(b) a QIB (within the meaning of Rule 144A under the Securities
Act) and, in each case under this sub clause (b), it has duly
executed an investor letter in a form provided to it and delivered
the same to Stifel or one of its affiliates and to the Company;
4. it is acquiring the Placing Shares for its own account or is
acquiring the Placing Shares for an account with respect to which
it exercises sole investment discretion and has the authority to
make and does make the representations, warranties, indemnities,
acknowledgements and agreements contained in the Announcement;
and
5. it understands (or, if acting for the account of another
person, such person understands) the resale and transfer
restrictions set out in this Appendix VI.
The Announcement does not constitute an offer or invitation to
underwrite, subscribe for or otherwise acquire or dispose of any
securities or investment advice in any jurisdiction, including,
without limitation, the United Kingdom, the United States,
Australia, Canada, Japan or South Africa. No public offer of
securities of the Company is being made in the United Kingdom, the
United States or elsewhere.
In particular, the Placing Shares referred to in the
Announcement 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 the Company
has not been registered as an investment company under the US
Investment Company Act of 1940, as amended. None of the
Announcement, the Placing Shares, nor any document related to the
Announcement or the Placing Shares, has been approved or
disapproved by the US Securities and Exchange Commission, any state
securities commission or other regulatory authority in the United
States, nor have any of the foregoing authorities passed upon or
endorsed the merits of the Placing or the accuracy or adequacy of
the Announcement. Any representation to the contrary is unlawful.
The Placing Shares are being offered and sold (i) outside the
United States in accordance with Regulation S and (ii) within the
United States only to QIBS in a transaction not involving a public
offering.
No prospectus has been, nor will be, filed with the securities
commission of any province or territory of Canada; no prospectus
has been lodged with and/or registered by, the Australian
Securities and Investments Commission or the Japanese Ministry of
Finance; and the Placing Shares have not been, nor will they be,
registered under or offered in compliance with the securities laws
of any state, province or territory of Australia, Canada, Japan or
South Africa. Accordingly, the Placing Shares may not (unless an
exemption under the relevant securities laws is applicable) be
offered, sold, resold or delivered or otherwise transferred,
directly or indirectly, in or into the United States, Australia,
Canada, Japan, South Africa or any other jurisdiction outside the
United Kingdom.
The information set out in the Announcement is not intended, and
should not be considered, as "advice" as defined in the Financial
Advisory and Intermediary Services Act 2002, nor does it purport to
describe all of the considerations that may be relevant to a
prospective investor.
The Announcement constitutes objective information about the
Company and the Placing Shares and nothing contained in it should
be construed as constituting any form of investment advice or
recommendation, guidance or proposal of a financial nature in
respect of any investment issued by the Company or any transaction
in relation to the Company or the Placing Shares. Any investor
contemplating making an investment in the Placing Shares should
determine its own investment objectives and experience, and any
other factors which may be relevant to it in connection with such
investment, and should consult its professional advisers in this
regard.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Appendix VI or the Announcement of which it forms part
should seek appropriate advice before taking any action.
Each Placee, by applying to participate in the Placing, agrees
that the content of the Announcement is exclusively the
responsibility of the Company and confirms that it has neither
received nor relied on any other information, representation,
warranty, or statement made by or on behalf of the Company, the
Investment Adviser or Stifel or any other person and neither
Stifel, the Company, the Investment Adviser nor any other person
will be liable for any Placee's decision to participate in the
Placing based on any other information, representation, warranty or
statement that the Placees may have obtained or received. Each
Placee acknowledges and agrees that it has relied on its own
investigation of the business, financial or other position of the
Company in accepting a participation in the Placing. Nothing in
this paragraph shall exclude the liability of any person for
fraudulent misrepresentation.
These terms and conditions are provided by Stifel which is
acting as agent for and on behalf of its affiliate Stifel Nicolaus
& Company, Inc., a US SEC registered broker-dealer pursuant to
a Rule 15a-6 intra-group company agreement.
Details of the Placing Agreement and the Placing Shares
Stifel has entered into a Placing Agreement with the Company and
the Investment Adviser under which Stifel, as agent of the Company,
on the terms and subject to the conditions set out therein, has
agreed to use reasonable endeavours to procure Placees to subscribe
for the Placing Shares.
The Placing Shares will, when issued, be credited as fully paid
and will rank pari passu in all respects with the existing Ordinary
Shares of 10 pence each in the capital of the Company including the
right to receive all future dividends and distributions declared,
made or paid after the date of sale. Subject to approval by the
Shareholders of the Company of the allotment and issue of the
Placing Shares on a non-pre-emptive basis (if necessary), the
Placing Shares are expected to be issued on 29 March 2018. The
Placing will be made on a non pre-emptive basis.
Application for listing and admission to trading
Application will be made for the Placing Shares to be admitted
to trading on AIM. It is expected that dealings in the Placing
Shares will commence no later than 8.00 a.m. on the Closing
Date.
Bookbuild
Stifel will today commence the Bookbuild in respect of the
Placing to determine demand for participation in the Placing by
Placees. This Appendix VI gives details of the terms and conditions
of, and the mechanics of participation in, the Placing. No
commissions will be paid to Placees or by Placees in respect of any
Placing Shares.
Stifel and the Company shall be entitled to effect the Placing
by such alternative method to the Bookbuild as they may, in their
joint discretion, determine.
Participation in, and principal terms of, the Placing
1. Participation in the Placing will only be available to
persons who may lawfully be, and are, invited to participate by
Stifel. Stifel and its affiliates are entitled to enter bids in the
Bookbuild as principal.
2. The Placing Price will be 365.0 pence per Placing Share.
3. The number of Placing Shares to be issued will be agreed
between Stifel and the Company, following completion of the
Bookbuild. The number of Placing Shares to be issued will be
announced through a Regulatory Information Service following the
completion of the Bookbuild.
4. To bid in the Bookbuild, prospective Placees should
communicate their bid by telephone to their usual sales contact at
Stifel. Each bid should state the number of Placing Shares which
the prospective Placee wishes to acquire at the Placing Price. Bids
may be scaled down by Stifel on the basis referred to in paragraph
07 below.
5. The Bookbuild is expected to close no later than 11:30 a.m.
(London time) on 26 March 2018 but may be closed earlier or later
at the discretion of Stifel and the Company. Stifel may, in
agreement with the Company, accept bids that are received after the
Bookbuild has closed.
6. Each prospective Placee's allocation will be confirmed to the
Placee orally by Stifel following the close of the Placing, and a
trade confirmation will be dispatched as soon as possible
thereafter. Stifel's oral confirmation to such Placee will
constitute an irrevocable legally binding commitment upon such
person (who will at that point become a Placee) in favour of Stifel
and the Company, under which the Placee agrees to acquire the
number of Placing Shares allocated to it at the Placing Price on
the terms and conditions set out in this Appendix VI and in
accordance with the Company's constitutional documents.
Subject to paragraphs 4 and 5, Stifel may choose to accept bids,
either in whole or in part, on the basis of allocations determined
by the Company at its discretion (in consultation with Stifel) and
may scale down any bids for this purpose on such basis as they may
determine. The acceptance of bids shall be at Stifel's absolute
discretion. Stifel may also, notwithstanding paragraphs 4 and 5,
subject to the prior consent of the Company, (i) allocate Placing
Shares after the time of any initial allocation to any person
submitting a bid after that time and (ii) allocate Placing Shares
after the Bookbuild has closed to any person submitting a bid after
that time. The Company reserves the right to reduce or increase the
amount to be raised pursuant to the Placing.
7. A bid in the Bookbuild will be made on the terms and subject
to the conditions set out in this Appendix VI and will be legally
binding on the Placee on behalf of which it is made and, except
with Stifel's consent, will not be capable of variation or
revocation after the time at which it is submitted. Each Placee
will also have an immediate, separate, irrevocable and binding
obligation, owed to Stifel and the Company, to pay to Stifel (or as
it may direct) in cleared funds an amount equal to the product of
the Placing Price and the number of Placing Shares such Placee has
agreed to acquire. Each Placee's obligations under this paragraph
will be owed to the Company and to Stifel.
8. Except as required by law or regulation, no press release or
other announcement will be made by Stifel or the Company using the
name of any Placee (or its agent) in its capacity as Placee (or
agent), other than with such Placee's prior written consent.
9. Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be acquired pursuant to the Placing will be required to
be made at the same time, on the basis explained below under
"Registration and Settlement".
10. All obligations under the Bookbuild and Placing will be
subject to fulfilment or (where applicable) waiver of the
conditions referred to below under "Conditions of the Placing" and
to the Placing not being terminated on the basis referred to below
under "Right to terminate under the Placing Agreement".
11. By participating in the Bookbuild, each Placee agrees that
its rights and obligations in respect of the Placing will terminate
only in the circumstances described below and will not be capable
of rescission or termination by the Placee.
12. To the fullest extent permissible by law, neither Stifel nor
any of its affiliates shall have any liability to Placees (or to
any other person whether acting on behalf of a Placee or
otherwise). In particular, neither Stifel nor any of its affiliates
nor the Company shall have any liability (including to the extent
permissible by law, any fiduciary duties) in respect of Stifel's
conduct of the Bookbuild or of such alternative method of effecting
the Placing as Stifel, its affiliates and the Company may
agree.
Conditions of the Placing
Stifel's obligations under the Placing Agreement are conditional
on, inter alia:
(a) Admission of the Placing Shares occurring not later than
8.00 a.m. (London time) on 29 March 2018 or such other date as may
be agreed between the Company and Stifel, not being later than 30
April 2018;
(b) the issue of the Circular to Shareholders of the Company on
the date of this Announcement (or such later time and date as may
be agreed between the Company and Stifel);
(c) the publication by the Company of the Placing Results
Announcement through a Regulatory Information Service as soon as
reasonably practicable following execution of a terms of sale
between the Company, the Investment Adviser and Stifel;
(d) if necessary, the Shareholders of the Company approving the
allotment and issue of the Placing Shares on a non-pre-emptive
basis;
(e) the Company allotting and issuing subject only to Admission,
the Placing Shares to the Placees procured by Stifel;
(f) the Company and the Investment Adviser having complied with
all their respective obligations and undertakings and having
satisfied all conditions to be satisfied by any of them under the
Placing Agreement on or prior to the Closing Date;
(g) the representations, warranties and undertakings on the part
of the Company and the Investment Adviser contained or referred to
in the Placing Agreement being true, accurate and not misleading on
and as of the date hereof, the allocation date and Admission, as
though they had been given and made on the relevant date by
reference to the facts and circumstances then subsisting, and no
matter having arisen prior to the Closing Date which might
reasonably be expected to give rise to a claim under the indemnity
set out in the Placing Agreement;
(h) each of the Hotels Portfolio Purchase Agreement, the Leisure
Portfolio Purchase Agreement and the Leisure Properties Purchase
Agreement remaining in full force and effect and not having lapsed
or been terminated prior to Admission, none of the representations,
warranties and agreements of the parties thereto ceasing to be
true, accurate and not misleading on and as of the date hereof, the
allocation date and Admission, each of the parties having complied
with all their respective obligations and undertakings thereunder
and all conditions to be satisfied by any of them (other than
Admission) thereunder having been satisfied or waived and (subject
to certain limited exceptions) no event having arisen at any time
prior to Admission which gives any party to either the Hotels
Portfolio Purchase Agreement, the Leisure Portfolio Purchase
Agreement or the Leisure Properties Purchase Agreement a right to
terminate it;
(i) in the opinion of Stifel there being or there having been no
material adverse change in, or any development involving a
prospective material adverse change in or affecting, the condition
(financial, operational, legal or otherwise), earnings, management,
business affairs or prospects of the Company or the Group taken as
a whole, whether or not arising in the ordinary course of business
since the execution of the Placing Agreement; and
If: (i) any of the conditions contained in the Placing Agreement
in relation to the Placing Shares, including those described above,
are not fulfilled or (where applicable) waived by Stifel by the
respective time or date where specified (or such later time or date
as the Company and Stifel may agree); or (ii) the Placing Agreement
is terminated in the circumstances specified below, the Placing
will lapse and the Placee's rights and obligations hereunder in
relation to the Placing Shares shall cease and terminate at such
time and each Placee agrees that no claim can be made by the Placee
against either the Company or Stifel in respect thereof.
The Placing is not conditional upon completion of either the
Hotels Portfolio acquisition or the Leisure Portfolio acquisition.
Therefore, subject to the conditions of the Placing being satisfied
or, where applicable, waived and the Placing Agreement not being
terminated, Admission will become effective and the net proceeds of
the Placing will be received by the Company before completion of
the Hotels Portfolio acquisition and the Leisure Portfolio
acquisition.
Stifel may, at its discretion and upon such terms as it thinks
fit, waive compliance with the whole or any part of any of the
obligations in relation to the conditions in the Placing Agreement,
save that the above conditions relating to Admission of the Placing
Shares taking place, the issue of the Circular to shareholders of
the Company, the publication of the Placing Results Announcement,
the approval by the shareholders of the Company of the allotment
and issue of the Placing Shares on a non-pre-emptive basis (if
necessary) and the Company's allotment and issue of the Placing
Shares may not be waived. Any such extension or waiver will not
affect Placees' commitments as set out in the Announcement.
Neither Stifel nor the Company shall have any liability to any
Placee (or to any other person whether acting on behalf of a Placee
or otherwise) in respect of any decision it may make as to whether
or not to waive or to extend the time and/or date for the
satisfaction of any condition to the Placing nor for any decision
they may make as to the satisfaction of any condition or in respect
of the Placing generally and by participating in the Placing each
Placee agrees that any such decision is within the absolute
discretion of Stifel and the Company.
Right to terminate under the Placing Agreement
Stifel may, at any time on or before the Closing Date, terminate
the Placing Agreement by giving notice to the Company in certain
circumstances, including, inter alia:
(a) any matter or circumstance arises as a result of which it is
reasonable to expect that any of the conditions will not be
satisfied or (to the extent capable of being waived) waived by
Stifel by the required time(s) (if any) and continue to be
satisfied at the Closing Date or have become incapable of
satisfaction; or
(b) there has been a breach by the Company or the Investment
Adviser of any of the representations, warranties, undertakings or
covenants respectively contained in or given pursuant the Placing
Agreement or any of the representations, warranties or undertakings
is not or has ceased to be, true, accurate and not misleading;
or
(c) the Company or the Investment Adviser has not complied with
all its obligations and undertakings under the Placing Agreement
which fall to be performed or satisfied on or prior to the Closing
Date; or
(d) it shall come to the notice of Stifel that any statement
contained in any of the placing documents (or any amendment or
supplement thereto) is or has become untrue or inaccurate in any
material respects or incomplete or misleading or any matter has
arisen, which would, if the Placing were made at that time,
constitute, in the opinion of Stifel, a material omission from the
placing documents, or any of them (or any amendment or supplement
to any of them) or there is, in the opinion of Stifel, a material
omission from any of the placing documents or a material omission
from or misleading inaccuracy in the Company's publicly available
information; or
(e) in the opinion of Stifel there shall have been a material
adverse change in, or any development involving a prospective
material adverse change in or affecting, the condition (financial,
operational, legal or otherwise), earnings, management, business
affairs or prospects of the Company or the Group taken as a whole,
whether or not arising in the ordinary course of business since the
execution of the Placing Agreement; or
(f) there has occurred any material adverse change in the
financial markets in the United States, the United Kingdom, any
other member state of the EEA or the international financial
markets, any outbreak of hostilities or escalation thereof, any act
of terrorism or war or other calamity or crisis or any change or
development involving a prospective change in national or
international political, financial or economic conditions, exchange
rates or exchange controls, in each case the effect of which is
such as to make it, in the judgement of Stifel, impracticable or
inadvisable to market the Placing Shares or to enforce contracts
for the subscription of the Placing Shares; or
(g) trading in any securities of the Company has been suspended
or limited by the London Stock Exchange on any exchange or
over-the-counter market, or if trading generally on the NYSE Amex
Equities, the New York Stock Exchange, the NASDAQ System or the
London Stock Exchange has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of such exchanges or by such
system or by order of the SEC, the Financial Industry Regulatory
Authority, the FCA or any governmental or self-regulatory
authority, or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the
United States, the United Kingdom or any other member state of the
EEA; or
(h) a banking moratorium has been declared by the authorities of
any of the United States, the United Kingdom, any other member
state of the EEA or the State of New York; or
(i) there has occurred an adverse change or a prospective
adverse change since the date of the Placing Agreement in the
United States or United Kingdom taxation affecting the Placing
Shares or the issue thereof or exchange controls have been imposed
by the United States, the United Kingdom or any other member state
of the EEA.
Following Admission of the Placing Shares, the Placing Agreement
shall not be capable of rescission or termination to the extent
that it relates to the Placing or the issue of the Placing
Shares.
If any of the obligations of Stifel with respect to the Placing
are terminated in the manner contemplated above, the rights and
obligations of each Placee shall cease and terminate at such time
and no claim can be made by any Placee in respect thereof. The
rights and obligations of the Placees shall terminate only in the
circumstances described in these terms and conditions and will not
be subject to termination by the Placee or any prospective Placee
at any time or in any circumstances.
By participating in the Placing, Placees agree that the exercise
by Stifel of any right of termination or other discretion under the
Placing Agreement shall be within the absolute discretion of Stifel
and that they need not make any reference to Placees and that they
shall have no liability to Placees whatsoever in connection with
any such exercise.
Lock-up
The Company has undertaken to Stifel that from the date of the
Placing Agreement until the date falling 90 days after Admission,
it will not, without the prior written consent of Stifel, directly
or indirectly, offer, issue, allot, lend, mortgage, assign, charge,
pledge, sell or contract to sell or issue, issue options in respect
of, or otherwise dispose of, directly or indirectly, or announce an
offering or issue of, any Shares (or any interest therein or in
respect thereof) or any other securities exchangeable for or
convertible into, or substantially similar to, Shares or enter into
any transaction with the same economic effect as, or agree to do,
any of the foregoing provided that the Company may issue Shares
pursuant to the terms of the Investment Advisory Agreement without
the prior written consent of Stifel. The Company is required to
issue 4,588,479 new Ordinary Shares to Prestbury Investments LLP in
order to satisfy its obligations under the Investment Advisory
Agreement to pay a performance fee earned in respect of the
financial year ended 31 December 2017.
No Prospectus
No offering document or prospectus has been or will be published
or submitted to be approved by the FCA or submitted to the London
Stock Exchange in relation to the Placing and no such prospectus is
required (in accordance with the Prospectus Directive) to be
published.
Placees' commitments will be made solely on the basis of the
information contained in the Announcement. Each Placee, by
accepting a participation in the Placing, agrees that the content
of the Announcement is exclusively the responsibility of the
Company and confirms that it has neither received nor relied on any
other information, representation, warranty, or statement made by
or on behalf of the Company, the Investment Adviser or Stifel or
any other person and none of Stifel, the Company nor the Investment
Adviser nor any other person will be liable for any Placee's
decision to participate in the Placing based on any other
information, representation, warranty or statement which the
Placees may have obtained or received. Each Placee acknowledges and
agrees that it has relied on its own investigation of the business,
financial or other position of the Company in accepting a
participation in the Placing. The Company is not making any
undertaking or warranty to any Placee regarding the legality of an
investment in the Placing Shares by such Placee under any legal,
investment or similar laws or regulations. Each Placee should not
consider any information in the Announcement to be legal, tax,
financial or business advice. Each Placee should consult its own
lawyer, tax adviser, financial adviser and business adviser for
legal, tax, financial and business advice regarding an investment
in the Placing Shares. Nothing in this paragraph shall exclude the
liability of any person for fraudulent misrepresentation.
Registration and Settlement
Settlement of transactions in the Placing Shares (ISIN:
GB00BLMQ9L68) following Admission will take place on a delivery
versus payment basis within the system administered by Euroclear UK
& Ireland Limited ("CREST").
Stifel and the Company reserve the right to require settlement
for and delivery of the Placing Shares to Placees by such other
means that they deem necessary if delivery or settlement is not
possible or practicable (including within the CREST system) or
would not be consistent with the regulatory requirements in the
Placee's jurisdiction.
Each Placee allocated Placing Shares in the Placing will be sent
a trade confirmation in accordance with the standing arrangements
in place with Stifel stating the number of Placing Shares allocated
to it at the Placing Price, the aggregate amount owed by such
Placee to Stifel and settlement instructions. Each Placee agrees
that it will do all things necessary to ensure that delivery and
payment is completed in accordance with either the standing CREST
or certificated settlement instructions that it has in place with
Stifel.
It is expected that settlement of Placing Shares will be on 29
March 2018 on a T+2 basis with the trade date being 27 March 2018
in accordance with the instructions set out in the trade
confirmation.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of two percentage points above LIBOR as
determined by Stifel and the Company.
Each Placee is deemed to agree that, if it does not comply with
these obligations, Stifel may sell any or all of the Placing Shares
allocated to that Placee on such Placee's behalf and retain from
the proceeds, for the Company's account and benefit, an amount
equal to the aggregate amount owed by the Placee plus any interest
due. The relevant Placee will, however, remain liable for any
shortfall below the aggregate amount owed by it and may be required
to bear any stamp duty or stamp duty reserve tax (together with any
interest or penalties) which may arise upon the sale of such
Placing Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the trade confirmation
is copied and delivered immediately to the relevant person within
that organisation.
Representations, Warranties and Further Terms
By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) for the benefit of the Company and
Stifel:
1. represents and warrants that it has read and understood the
Announcement, including this Appendix VI, in its entirety and that
its subscription of the Placing Shares is subject to and based upon
only the terms, conditions, representations, warranties,
acknowledgments, agreements and undertakings and other information
contained herein;
2. acknowledges that no offering or admission document or
prospectus has been prepared or published in connection with the
placing of the Placing Shares and represents and warrants that it
has not received a prospectus or other offering or admission
document in connection therewith;
3. acknowledges that the content of the Announcement is
exclusively the responsibility of the Company and that none of
Stifel, its affiliates or any person acting on behalf of them has
or shall have any liability for any information, representation or
statement contained in the Announcement or any information
previously published by or on behalf of the Company and will not be
liable for any Placee's decision to participate in the Placing
based on any information, representation or statement contained in
the Announcement or otherwise;
4. acknowledges that the Ordinary Shares in the capital of the
Company are admitted to trading on AIM and that the Company is
therefore required to publish certain business and financial
information in accordance with law and that it is able to obtain or
access such information, or comparable information concerning any
other publicly traded company, in each case without undue
difficulty;
5. acknowledges that none of Stifel, its affiliates nor any
person acting on behalf of any of them has or shall have any
liability for any publicly available or filed information or any
information, representation, warranty or statement relating to the
Company or its business contained therein or otherwise, provided
that nothing in this paragraph excludes the liability of any person
for fraudulent misrepresentation made by that person;
6. represents and warrants that it is not, and at the time the
Placing Shares are acquired will not be, a resident of Australia,
Japan or South Africa;
7. acknowledges that the Placing Shares have not been and will
not be registered or qualified for offer and sale and, subject to
certain exceptions, may not be offered, sold or delivered or
transferred, directly or indirectly, within the United States,
Australia, Canada, Japan or South Africa and agrees not to reoffer,
resell, pledge or otherwise transfer the Placing Shares except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act;
8. represents and warrants that the issue to it, or the person
specified by it for registration as holder, of Placing Shares will
not give rise to liability under any of sections 67, 70, 93 or 96
of the Finance Act 1986 (depositary receipts and clearance
services) and that the Placing Shares are not being acquired in
connection with arrangements to issue depositary receipts or to
transfer Placing Shares into a clearance system;
9. represents and warrants that it has complied with its
obligations under the Criminal Justice Act 1993, the Market Abuse
Regulation and in connection with money laundering and terrorist
financing under the Proceeds of Crime Act 2002 (as amended), the
Terrorism Act 2000, the Terrorism Act 2006, the Money Laundering
Regulations 2007 (the "Regulations") and the Money Laundering
Sourcebook of the FCA and, if making payment on behalf of a third
party, that satisfactory evidence has been obtained and recorded by
it to verify the identity of the third party as required by the
Regulations;
10. if a financial intermediary, as that term is used in Article
3(2) of the Prospectus Directive, represents and warrants that the
Placing Shares purchased by it in the Placing will not be acquired
on a non-discretionary basis on behalf of, nor will they be
acquired with a view to their offer or resale to, persons in a
member state of the EEA which has implemented the Prospectus
Directive other than Qualified Investors, or in circumstances in
which the prior consent of Stifel has been given to the offer or
resale;
11. represents and warrants that it has not offered or sold and
will not offer or sell any Placing Shares to persons in the United
Kingdom, except to Qualified Investors or otherwise in
circumstances which have not resulted and which will not result in
contravention of section 85(1) of the FSMA;
12. represents and warrants that it has not offered or sold and
will not offer or sell any Placing Shares to persons in the EEA
prior to Admission except to Qualified Investors or otherwise in
circumstances which have not resulted in and which will not result
in the requirement to publish a prospectus in any member state of
the EEA within the meaning of the Prospectus Directive;
13. represents and warrants that it has only communicated or
caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment
activity (within the meaning of section 21 of the FSMA) relating to
the Placing Shares in circumstances in which section 21(1) of the
FSMA does not require approval of the communication by an
authorised person;
14. represents and warrants that it has complied and will comply
with all applicable provisions of the FSMA and the Market Abuse
Regulation with respect to anything done by it in relation to the
Placing Shares in, from or otherwise involving, the United
Kingdom;
15. represents and warrants that if it resides in a member state
of the EEA other than the United Kingdom it is a Qualified Investor
within the meaning of the Prospectus Directive;
16. represents and warrants that if it resides in the United
Kingdom it is a Qualified Investor within the meaning of the
Prospectus Directive and a person (a) who has professional
experience in matters relating to investments and is an "Investment
Professional" falling within article 19(5) (investment
professionals) of the Order, or (b) who falls within article
49(2)(a) to (d) (high net worth companies, unincorporated
associations etc.) of the Order;
17. represents and warrants that it and any person acting on its
behalf is entitled to acquire the Placing Shares under the laws of
all relevant jurisdictions and that it has all necessary capacity
and has obtained all necessary consents and authorities to enable
it to commit to this participation in the Placing and to perform
its obligations in relation thereto (including, without limitation,
in the case of any person on whose behalf it is acting, all
necessary consents and authorities to agree to the terms and
conditions set out in this Appendix VI) and will honour such
obligations;
18. undertakes that it (and any person acting on its behalf)
will make payment for the Placing Shares allocated to it in
accordance with this Appendix VI on the due time and date set out
herein and it has obtained all necessary consents and authorities
to enable it to give its commitment so to subscribe, failing which
the relevant Placing Shares may be placed with other Placees or
sold as Stifel may in its sole discretion determine and without
liability to such Placee, who will remain liable for any amount by
which the net proceeds of such sale falls short of the product of
the Placing Price and the number of Placing Shares allocated to it
and may be required to bear any stamp duty, stamp duty reserve tax
or other similar taxes (together with any interest or penalties due
pursuant to the terms and conditions set out in this Appendix VI)
which may arise upon the placing or sale of such Placee's Placing
Shares on its behalf;
19. acknowledges that none of Stifel, nor any of its affiliates,
nor any person acting on behalf of any of them, is making any
recommendations to it, nor advising it regarding the suitability of
any transactions it may enter into in connection with the Placing
and that participation in the Placing is on the basis that it is
not and will not be a client of Stifel and that Stifel does not
have any duty or responsibility to it for providing the protections
afforded to its clients or customers or for providing advice in
relation to the Placing nor in respect of any representations,
warranties, acknowledgements, undertakings or indemnities contained
in the Placing Agreement nor for the exercise or performance of any
of its rights and obligations thereunder including any rights to
waive or vary any conditions or exercise any termination right;
20. undertakes that the person whom it specifies for
registration as holder of the Placing Shares will be (i) itself or
(ii) its nominee, as the case may be. Neither Stifel nor the
Company will be responsible for any liability to stamp duty, stamp
duty reserve tax or any similar tax resulting from a failure to
observe this requirement. Each Placee and any person acting on
behalf of such Placee agrees to participate in the Placing and it
agrees to indemnify the Company and Stifel on an after tax basis in
respect of the same on the basis that the Placing Shares will be
allotted to the CREST account of Stifel or its affiliate or agent
who will hold them as nominee on behalf of such Placee until
settlement in accordance with its standing settlement
instructions;
21. acknowledges that any agreements entered into by it pursuant
to these terms and conditions, and all non-contractual or other
obligations arising out of or in connection with them, shall be
governed by and interpreted in accordance with English law and it
submits (on behalf of itself and on behalf of any person on whose
behalf it is acting) to the exclusive jurisdiction of the English
courts as regards any claim, dispute or matter arising out of any
such contract (including any dispute regarding the existence,
validity or termination of such contract or relating to any non
contractual or other obligation arising out of or in connection
with such contract), except that enforcement proceedings in respect
of the obligation to make payment for the Placing Shares (together
with any interest chargeable thereon) may be taken by either the
Company or Stifel in any jurisdiction in which the relevant Placee
is incorporated or in which any of its securities have a quotation
on a recognised stock exchange;
22. agrees to indemnify on an after tax basis and hold the
Company, Stifel and its affiliates harmless from any and all costs,
claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of the
representations, warranties, acknowledgements, agreements and
undertakings in this Appendix VI and further agrees that the
provisions of this Appendix VI shall survive after completion of
the Placing;
23. it is either:
(a) not a US Person and is located outside the United States at
the time of receiving the Announcement and will not be in the
United States at the time it subscribes for Placing Shares; or
(b) a QIB and, in each case under this sub clause (b), it has
duly executed an investor letter in a form provided to it and
delivered the same to Stifel or one of its affiliates and to the
Company;
24. understands and acknowledges (and each account for which it
is acting has been advised and understands and acknowledges) that
the Placing Shares have not been and will not be registered under
the Securities Act or the securities laws of any state of the
United States, and that they may not be offered, sold, resold,
transferred or delivered to, directly or indirectly, in the United
States or to any US Person, except pursuant to an exemption from
the registration requirements of the Securities Act and applicable
state securities laws;
25. understands and agrees that the Placing Shares are being
offered in a transaction not involving any public offering within
the meaning of Section 4(a)(2) of the Securities Act, and that it
is not purchasing the Placing Shares as a result of any general
solicitation or general advertising within the meaning of Rule 502
under the Securities Act or as a result of any directed selling
efforts (as defined in Rule 902 of Regulation S);
26. is acquiring the Placing Shares for its own account, or, for
the account of one or more other persons (which, in the case of US
Persons or persons located in the United States, are QIBs) for
which it is acting as duly authorized fiduciary or agent with sole
investment discretion with respect to each such account, and in
each case with full authority to make the acknowledgments,
representations and agreements herein with respect to each such
account (including delivery of a duly executed investor letter as
contemplated by paragraph 23(b) above), in each case for investment
and not with a view to any resale or distribution;
27. unless it has received the written consent of the Company,
it is not and will not be, acquiring the Placing Shares with the
assets of or on behalf of, (i) an "employee benefit plan" as
described in section 3(3) of the US Employee Retirement Income
Security Act of 1974, as amended ("ERISA") that is subject to the
provisions of title I of ERISA, (ii) a "plan" to which section 4975
of the US Internal Revenue Code of 1986, as amended (the "Code")
applies or (iii) an entity whose underlying assets are deemed to
include the assets of an employee benefit plan or plan described in
(i) or (ii) above, (b) if it is a non-US plan, "governmental plan"
or "church plan", the purchase and holding of the Placing Shares or
any interest therein does not violate any law or regulation that is
substantially similar to ERISA or Section 4975 of the Code or any
statute, regulation, administrative decision, policy or other legal
authority applicable to such non-US plan, governmental plan or
church plan and the purchase and holding of the Placing Shares or
any interest therein will not result in the assets of the Company
being deemed to include the assets of such non-US plan,
governmental plan or church plan and (c) it will not sell or
otherwise transfer any such securities or interest to any person
without first obtaining the same foregoing representations,
warranties and covenants from that person.
28. in the case of any Placee located in the United States or
which is a US Person, acknowledges and agrees that there may be
certain consequences under United States and other tax laws
resulting from an investment in the Placing Shares, and it has made
such investigation and has consulted its own independent advisers
or otherwise has satisfied itself concerning, without limitation,
the effects of United States federal, state and local income tax
laws and foreign tax laws generally and the US Employee Retirement
Income Security Act of 1974, the US Investment Company Act of 1940
and the Securities Act;
29. represents and warrants that it has not offered or sold and
will not offer or sell any Placing Shares to persons in Canada,
except to persons purchasing, or deemed to be purchasing, as
principal that are accredited investors, as defined in National
Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of
the Securities Act (Ontario), and are permitted clients, as defined
in National Instrument 31-103 Registration Requirements, Exemptions
and Ongoing Registrant Obligations;
30. represents and warrants that if it resides in Canada it is
purchasing, or deemed to be purchasing, as principal that are
accredited investors, as defined in National Instrument 45-106
Prospectus Exemptions or subsection 73.3(1) of the Securities Act
(Ontario), and are permitted clients, as defined in National
Instrument 31-103 Registration Requirements, Exemptions and Ongoing
Registrant Obligations;
31. acknowledges and agrees that it has had access to such
financial and other information, if any, regarding the Company and
the Placing Shares as it has requested in connection with its
investment decision to purchase Placing Shares. It acknowledges
that neither the Company, the Investment Adviser nor Stifel, nor
any person representing or otherwise acting on behalf of the
Company, the Investment Adviser or Stifel has made any
representation, express or implied, to it with respect to the
Company or the Placing other than (in the case of the Company and
its affiliates only) the information (i) contained in the
Announcement, (ii) published by the Company by notification through
a Regulatory Information Service on or prior to the date of the
Announcement, or (iii) contained in annual audited accounts
published by the Company (including for the year ended 31 December
2017), and upon which it is relying solely in making its investment
decision with respect to the Placing Shares. It acknowledges that
it has not relied on any information contained in any research
reports prepared by Stifel or any of its affiliates;
32. represents and warrants that it is a corporation,
partnership or other entity having such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of its investment decision to receive or purchase
the Placing Shares, and it and each of the discretionary accounts
for which it is receiving or purchasing Placing Shares (i) in the
normal course of business, invest in or purchase securities similar
to the Placing Shares, (ii) is a highly sophisticated investor that
has such knowledge and experience in financial and business matters
as to be capable of evaluating such securities, (iii) has made its
own independent investigation and appraisal of the business
results, financial condition, prospects, creditworthiness, status
and affairs of the Company, and is not entitled to rely on any
investigation that any other person may have conducted with respect
to the Placing Shares or the Company, (iv) has evaluated the merits
and risks of its investment in the Placing Shares, (v) has
satisfied itself concerning legal, regulatory, tax, business and
financial considerations in connection herewith to the extent it
deems necessary and it and any accounts for which it is acting are
each able to bear the economic risk of it or their investment in
the Placing Shares, (vi) will not look to the Company, its
directors, officers or affiliates or to Stifel for all or part of
any such loss or losses it or they may suffer, (vii) is able to
sustain a complete loss on its or their investment in the Placing
Shares, (viii) has no need for liquidity with respect to its or
their investment in the Placing Shares and (ix) has no reason to
anticipate any change in its or their circumstances, financial
or
otherwise, which may cause or require any sale or distribution
by it of all or any part of the Placing Shares;
33. agrees not to deposit any of the Placing Shares it may
acquire into any unrestricted depositary receipt facility
established or maintained by a depositary bank, unless, subject to
the terms of any applicable deposit agreement, at the time of
deposit such Placing Shares are no longer "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act;
34. understands and acknowledges that an investment in the
Placing Shares involves a considerable degree of risk and no US
federal or state or non-US agency has made any finding or
determination as to the fairness for investment or any
recommendation or endorsement of any such investment;
35. acknowledges that the Company, Stifel, their respective
affiliates and others will rely upon the truth and accuracy of the
foregoing acknowledgements, representations, warranties and
agreements and agrees that if it is purchasing Placing Shares as a
fiduciary or agent for one or more investor accounts, it represents
and warrants that it has sole investment discretion with respect to
each such account and that it has full power to, and does, make the
acknowledgements, representations, warranties and agreements made
herein on behalf of such account;
36. represents and warrants that it has neither received nor
relied on any confidential price sensitive information concerning
the Company in accepting this invitation to participate in the
Placing;
37. if it is a pension fund or investment company, its purchase
of Placing Shares is in full compliance with applicable laws and
regulations; and
38. if it is acting as a "distributor" (for the purposes of the MiFID II Product Governance Requirements):
(a) it acknowledges that the Target Market Assessment undertaken
by Stifel and the Company does not constitute: (a) an assessment of
suitability or appropriateness for the purposes of MiFID II; or (b)
a recommendation to any investor or group of investors to invest
in, or purchase, or take any other action whatsoever with respect
to the Placing Shares, and each distributor is responsible for
undertaking its own target market assessment in respect of the
Placing Shares and determining appropriate distribution
channels;
(b) notwithstanding any Target Market Assessment undertaken by
Stifel and the Company, it confirms that it has satisfied itself as
to the appropriate knowledge, experience, financial situation, risk
tolerance and objectives and needs of the investors to whom it
plans to distribute the Placing Shares and that it has considered
the compatibility of the risk/reward profile of such Placing Shares
with the end target market; and
(c) it acknowledges that the price of the Ordinary Shares may
decline and investors could lose all or part of their investment;
the Ordinary Shares offer no guaranteed income and no capital
protection; and an investment in the Ordinary Shares is compatible
only with investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits
and risks of such an investment and who have sufficient resources
to be able to bear any losses that may result therefrom.
The foregoing representations, warranties, confirmations,
acknowledgements and undertakings (as the case may be) are given
for the benefit of the Company and Stifel and are irrevocable.
In addition, Placees should note that they will be liable for
any stamp duty and all other stamp, issue, securities, transfer,
registration, documentary or other duties or taxes (including any
interest, fines or penalties relating thereto) payable outside the
United Kingdom by them or any other person on the subscription by
them of any Placing Shares or the agreement by them to subscribe
for any Placing Shares.
Each Placee, and any person acting on behalf of the Placee,
acknowledges and agrees that Stifel does not owe any fiduciary or
other duties to any Placee in respect of any representations,
warranties, undertakings or indemnities in the Placing
Agreement.
Each Placee and any person acting on behalf of the Placee
acknowledges and agrees that Stifel or any of its affiliates may,
at its absolute discretion, agree to become a Placee in respect of
some or all of the Placing Shares.
When a Placee or person acting on behalf of the Placee is
dealing with Stifel, any money held in an account with Stifel on
behalf of the Placee and/or any person acting on behalf of the
Placee will not be treated as client money within the meaning of
the rules and regulations of the FCA made under the FSMA. The
Placee acknowledges that the money will not be subject to the
protections conferred by the client money rules; as a consequence,
this money will not be segregated from Stifel's money in accordance
with the client money rules and will be used by Stifel in the
course of its own business and the Placee will rank only as a
general creditor of Stifel.
If the Company or Stifel or their respective affiliates request
any information about a Placee's agreement to subscribe for Placing
Shares and/or any evidence supporting the representations and
warranties given above, such Placee shall (and it undertakes to)
promptly disclose such information or evidence (as applicable to
them).
All times and dates in the Announcement may be subject to
amendment. Stifel shall notify the Placees and any person acting on
behalf of the Placees of any changes.
IMPORTANT NOTICES
This Announcement has been prepared by and is the sole
responsibility of the Company.
This Announcement is only being distributed to and is only
directed at (i) investment professionals falling within Article
19(5) of the Financial Promotion Order; (ii) high net worth
entities, and other persons to whom it may lawfully be
communicated, falling within Article 49(2)(a) to (d) of the
Financial Promotion Order; or (iii) other persons to whom it may
lawfully be communicated (all such persons together being referred
to as "Relevant Persons"). The securities proposed to be sold are
only available to, and any invitation, offer or agreement to
subscribe, purchase or otherwise acquire such securities will be
engaged in only with, Relevant Persons. Any person who is not a
Relevant Person should not act or rely on this Announcement or any
of its contents.
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, fairness or completeness.
This Announcement does not constitute, or form part of, any
offer or invitation to sell or issue, or any solicitation of any
offer to purchase or subscribe for any Ordinary Shares or other
securities of the Company in any jurisdiction, including the United
States, Australia, Canada, Japan or South Africa or in any
jurisdiction in which such offer or sale would be unlawful prior to
registration, exemption from registration or qualification under
the securities laws of any jurisdiction. The Placing and the
distribution of this Announcement and other information in
connection with the Placing in certain jurisdictions may be
restricted by law and persons into whose possession this
Announcement, any document or other information referred to herein
comes should inform themselves about and observe any such
restriction. Any failure to comply with these restrictions may
constitute a violation of the securities laws of any such
jurisdiction. Neither this Announcement nor any part of it nor the
fact of its distribution shall form the basis of or be relied on in
connection with or act as an inducement to enter into any contract
or commitment whatsoever.
The Placing timetable may be influenced by a range of
circumstances, including market conditions. Acquiring investments
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 or any investment in the Company. The value of the
Company's Ordinary Shares can decrease as well as increase.
Potential investors should consult a professional adviser as to the
suitability of the Placing for the person concerned. Past
performance cannot be relied upon as a guide to future
performance.
This Announcement is not for distribution, directly or
indirectly, in whole or in part, in or into the United States
(including its territories and possessions, any State of the United
States and the District of Columbia), Australia, Canada, Japan or
South Africa or any other jurisdiction where it is unlawful to
distribute this Announcement. In particular, this Announcement is
not an offer of securities for sale in the United States. The
Placing Shares have not been and will not be registered under the
Securities Act or under any securities laws of any State or other
jurisdiction of the United States, and may not be offered or sold
in the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act. There will be no public offer of the securities
referred to herein in any jurisdiction, including in the United
States, Australia, Canada, Japan or South Africa. The Placing
Shares have not been registered under the applicable securities
laws of Australia, Canada, Japan, or South Africa and, subject to
certain exceptions, may not be offered or sold within Australia,
Canada, Japan or South Africa or to any national, resident or
citizen of Australia, Canada, Japan or South Africa.
Solely for the purposes of the MiFID II Product Governance
Requirements, and disclaiming all and any liability, whether
arising in tort, contract or otherwise, which any manufacturer (for
the purposes of the MiFID II Product Governance Requirements) may
otherwise have with respect thereto, the Placing Shares have been
subject to a product approval process, which has determined that
the Placing Shares are: (i) compatible with an end target market of
retail investors and investors who meet the criteria of
professional clients and eligible counterparties, each as defined
in MiFID II; and (ii) eligible for distribution through all
distribution channels as are permitted by MiFID II (the Target
Market Assessment).
Notwithstanding the Target Market Assessment, distributors
should note that: the price of the Ordinary Shares may decline and
investors could lose all or part of their investment; the Ordinary
Shares offer no guaranteed income and no capital protection; and an
investment in the Ordinary Shares is compatible only with investors
who do not need a guaranteed income or capital protection, who
(either alone or in conjunction with an appropriate financial or
other adviser) are capable of evaluating the merits and risks of
such an investment and who have sufficient resources to be able to
bear any losses that may result therefrom. The Target Market
Assessment is without prejudice to the requirements of any
contractual, legal or regulatory selling restrictions in relation
to the Placing. Furthermore, it is noted that, notwithstanding the
Target Market Assessment, Stifel will only procure investors who
meet the criteria of professional clients and eligible
counterparties.
For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of MiFID II; or (b) a recommendation to any
investor or group of investors to invest in, or purchase, or take
any other action whatsoever with respect to the Ordinary
Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the Ordinary Shares and determining
appropriate distribution channels.
The Announcement contains forward-looking statements. These
statements relate to the future prospects, developments and
business strategies of the Company. Forward-looking statements are
identified by the use of such terms as "believe", "could",
"envisage"", ""estimate", "potential", "intend", "may", "plan",
"will" or variations or similar expressions, or the negative
thereof. The forward-looking statements contained in the
Announcement are based on current expectations and are subject to
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by those statements. If
one or more of these risks or uncertainties materialise, or if any
underlying assumptions prove incorrect, the Company's actual
results may vary materially from those expected, estimated or
projected. Given these risks and uncertainties, certain of which
are beyond the Company's control, potential investors should not
place any reliance on forward-looking statements. These
forward-looking statements speak only as at the date of this
Announcement. Except as required by law, the Company undertakes no
obligation to publicly release any update or revisions to the
forward-looking statements contained in this Announcement to
reflect any change in events, conditions or circumstances on which
any such statements are based after the time they are made.
Stifel, which is authorised and regulated in the United Kingdom
by the FCA, is acting as bookrunner and nominated adviser
connection with the matters referred to herein, 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 the contents of the Presentation or any transaction or
arrangement referred to herein.
Apart from the responsibilities and liabilities, if any, which
may be imposed on Stifel by the FSMA or the regulatory regime
established thereunder, Stifel accepts no responsibility
whatsoever, and makes no representation or warranty, express or
implied, in relation to the contents of the Announcement, including
its accuracy, completeness or verification or for any other
statement made or purported to be made by it, or on behalf of it,
the Company, the directors, the Investment Adviser or any other
person in connection with the Company, the Placing, the Placing
Shares or the matters referred to herein, and nothing in this
Announcement is or shall be relied upon as a promise or
representation in this respect, whether as to the past or future.
Stifel accordingly disclaims all and any liability whether arising
in tort, contract or otherwise (save as referred to above), which
it might otherwise have in respect of the Announcement or any such
statement.
Certain figures contained in this Announcement, including
financial information, have been subject to rounding adjustments.
Accordingly, in certain instances, the sum or percentage change of
the numbers contained in this Announcement may not conform exactly
with the total figure given.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCSSFSDUFASEDD
(END) Dow Jones Newswires
March 09, 2018 02:01 ET (07:01 GMT)
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