Redefine International PLC Proposed Acquisition of further stake in IHL (4376L)

TIDMRDI

RNS Number : 4376L

Redefine International PLC

19 July 2017

REDEFINE INTERNATIONAL P.L.C.

("Redefine International" or the "Company")

(Registered number 010534V)

LSE share code: RDI

JSE share code: RPL

ISIN: IM00B8BV8G91

PROPOSED ACQUISITION OF A FURTHER STAKE IN INTERNATIONAL HOTEL PROPERTIES LIMITED

Redefine International, the FTSE 250 income-focused UK REIT, announces that it has submitted a proposal to International Hotel Properties Limited ("IHL") to increase its shareholding in IHL from 17.24% to 50%. IHL is listed on the Euro MTF market of the Luxembourg Stock Exchange ("LuxSE") and on the AltX of the JSE.

Redefine International intends to increase its current shareholding in IHL to 50% by acquiring 18,343,166 IHL shares from the minority shareholders by way of a scheme of arrangement under the BVI Business Companies Act, 2004. Consideration for the IHL shares will be made through the issue of 2.5 Redefine International shares for every 1 IHL share held, for which an additional 45,857,915 new Redefine International shares will be allotted. On implementation of the scheme, the listing of IHL's shares on both the JSE and LuxSE would be terminated (the "Proposed Transaction"). Following the transaction, hotels are expected to comprise approximately 19% of the Company's gross assets, up from 16% at 28 February 2017. It is anticipated that material savings will be generated through the integration of the hotel assets into the Company's existing hotel portfolio and REIT status.

The IHL portfolio comprises nine good quality UK hotels valued at GBP104.35 million and which complement Redefine International's standing hotels portfolio. Four of the hotels, comprising 27.7% of the portfolio, are let on long term leases to Travelodge with an effective average unexpired lease term of over 20 years. The Travelodge portfolio reflects a net initial yield of 5.3% and benefits from five yearly RPI escalations providing attractive rental growth prospects in a higher inflationary environment.

The remaining five hotels, valued at GBP75.4 million, will be managed by the Company's associate RedefineBDL Hotel Group. Four of the hotels are franchised to Holiday Inn Express and one to Hampton by Hilton. The five hotels to be managed by RedefineBDL have a strong trading record and provide exposure to the Hampton by Hilton at Gatwick airport which is integrally linked to the airport terminal building and the Holiday Inn Express, Edinburgh which has shown strong growth since acquisition. The five franchised hotels are anticipated to deliver an effective net initial yield of over 7.5%. The portfolio is currently financed at 50.0% loan to value at an all-in cost of debt of 3.32%.

The Proposed Transaction, if it proceeds, will include the acquisition of 2,410,315 IHL shares from Marc Wainer and his associates, 28,316 IHL shares from Mike Watters, both of whom are directors of Redefine International, and the acquisition (post implementation of the Proposed Transaction and outside of the scheme of arrangement) of a further 1,913,479 IHL shares from Redefine Properties Limited, a substantial shareholder of the Company (the "Related Parties"). The acquisition of the IHL shares from the Related Parties will be on the same terms as those for all other minority shareholders.

Redefine International will only proceed with the Proposed Transaction if it is satisfied that it has sufficient support from the minority IHL shareholders, is in compliance with Chapter 11 of the UK Listing Rules and has final ratification by the Redefine International Board.

Mike Watters, CEO of Redefine International, commented:

"This is an opportunistic acquisition which increases the Company's ownership in a high-quality and high yielding hotel portfolio to 50% and increases our exposure to the strong UK hotel market, whilst increasing our exposure to RPI-linked leases."

For further information please refer to the IHL cautionary announcement, released today on the JSE and LuxSE, which can be found at http://www.internationalhotelproperties.com/news/

For further information:

 
 Redefine International P.L.C. 
  Mike Watters, Stephen Oakenfull     Tel: +44 (0) 20 
                                      7811 0100 
 FTI Consulting 
  UK Public Relations Adviser 
  Dido Laurimore, Claire Turvey,      Tel: +44 (0) 20 
  Ellie Sweeney                       3727 1000 
 Instinctif Partners 
  SA Public Relations Adviser 
  Frederic Cornet, Lizelle du         Tel: +27 (0) 11 
  Toit                                447 3030 
 Java Capital 
  JSE Sponsor                         Tel: +27 (0) 11 
                                      722 3050 
 

Note to editors:

About Redefine International

Redefine International is an income focused FTSE 250 UK Real Estate Investment Trust (UK-REIT) committed to delivering superior distributions to its shareholders throughout the property cycle.

The Company's income driven total returns are underpinned by a diversified portfolio, together with an efficient capital structure. The continued transformation of both the corporate structure and asset base offer a solid foundation to drive further value. At 28 February 2017, the diversified portfolio, independently valued at GBP1.5 billion, is focused in Europe's two strongest economies, being the United Kingdom and Germany. The portfolio is weighted towards well located properties across a range of sectors, including retail, offices, distribution and hotels, which benefit from strong demand and from which they can capture income and value growth by attracting high calibre occupiers on long leases. The Company's investment philosophy is to effectively allocate recycled capital from mature assets into sectors and locations with strong occupier fundamentals and individual assets with realisable upside.

The secure income stream is supported by a diversified portfolio and tenant base, with a WAULT of 7.5 years complemented by an average debt maturity of 6.8 years of which over 95% of interest costs are either fixed or capped. The Company is focused on all aspects impacting shareholder distributions and boasts one of the lowest cost ratios in the industry whilst continuously driving lower cost of debt.

Redefine International holds a primary listing on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange and is included within the FTSE 250, EPRA and GPR indices.

For more information on Redefine International, please refer to the Company's website www.redefineinternational.com.

About International Hotel Properties Limited

IHL is a hotel and leisure focused property Investment Company that owns nine hotels in the UK. The Company's shares are currently listed on the Euro MTF market of the Luxembourg Stock Exchange, which constitutes its primary listing, and on the AltX of the JSE which constitutes its secondary listing.

For more information on IHL, please refer to the Company's website http://www.internationalhotelproperties.com

This information is provided by RNS

The company news service from the London Stock Exchange

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July 19, 2017 02:30 ET (06:30 GMT)