Secure Income REIT PLC Results of Placing Announcement (5647L)

TIDMSIR

RNS Number : 5647L

Secure Income REIT PLC

04 October 2016

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN, SOUTH AFRICA OR AUSTRALIA OR ANY JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR IMMEDIATE RELEASE.

4 October 2016

Secure Income REIT Plc

("SIR" or the "Company")

SECURE INCOME REIT RAISES GBP140 MILLION FOR TRAVELODGE ACQUISITION IN VERY HEAVILY OVERSUBSCRIBED PLACING

The board of directors of Secure Income REIT Plc, the specialist long term income REIT, is pleased to announce that the Company has successfully raised gross proceeds of GBP140.0 million in a very heavily oversubscribed Placing of 46,885,466 shares (the "Placing Shares").

The Placing Shares will be issued at a price of 298.6 pence per share (the "Placing Price") pursuant to the terms and conditions of the Placing set out in the Company's announcement of 8 September 2016. The Prestbury team and the Board of Directors have subscribed for GBP5.4 million in the Placing. Following the Placing, the Prestbury team will own 15.3% of the Company's enlarged share capital, equivalent to GBP104 million at the Placing Price, maintaining its position of holding one of the largest management shareholdings in the quoted real estate sector.

Application has been made for the Placing Shares to be admitted to trading on AIM ("Admission"). It is expected that dealings in the Placing Shares will commence at 8.00 a.m. (London time) on 6 October 2016.

The Placing Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the Company's existing ordinary shares.

Following Admission of the Placing Shares, and in accordance with the Disclosure and Transparency Rules, the Company's issued share capital will comprise 227,229,706 shares. There are no shares held in treasury. Accordingly the total number of voting rights in the Company will be 227,229,706. The above figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the ordinary share capital of the Company under the Disclosure and Transparency Rules.

Acquisition update

The total cost of the acquisition of the 55 hotel assets is GBP196.2 million, as previously reported, which will be financed by the proceeds of the Placing and a new GBP60 million secured fixed rate seven year non-recourse credit facility from M&G.

The Company expects to complete the acquisition on 28 October 2016.

Martin Moore, Independent Non-Executive Chairman of the Company, commented:

"The success of this Placing is a clear reflection of the expected accretive impact that the acquisition of the Travelodge portfolio will have on both the Company's growth prospects and its dividend payments, which the Board believes are highly compelling attributes for investors in a low interest rate and low growth environment. The Travelodge transaction is precisely in line with the strategy set out at IPO of growing the Company through acquisitions which are highly complementary to SIR's existing portfolio - in this case the assets being individually leased on full repairing and insuring terms with an exceptionally long weighted average unexpired term of 27 years and with upwards only, uncapped RPI linked rent reviews.

"In addition to an expanded and more diverse portfolio, the Company is also pleased to have continued to broaden its shareholder base, which should provide strong support for future value accretive acquisition opportunities, whilst the management team at Prestbury, which is already substantially invested in the Company, is now also further aligned."

Related Party considerations

Prestbury and Board participation in the Placing

Members of the Prestbury team and members of the Board and certain of their associates, have invested a further GBP5.4 million in the Company pursuant to the Placing. These investments are shown in the table below:

 
 
                            Number        Price per        Number of         Percentage 
                           of shares     share (pence)      ordinary          of issued 
                           acquired                        shares held      share capital 
                           under the                       immediately     held immediately 
                            Placing                         after the         after the 
                                                           Placing(1)         Placing(1) 
                                                             (2) (3)           (2) (3) 
Nick Leslau(1) 
 (3)                      669,792          298.6           669,792             0.29% 
Nigel Wray(2) 
 (3)                      669,792          298.6           669,792             0.29% 
Martin Moore               33,489          298.6            90,960             0.04% 
Mike Brown                334,896          298.6           909,608             0.40% 
Leslie Ferrar              8,372           298.6            22,739             0.01% 
Sandy Gumm                 50,234          298.6           165,176             0.07% 
Prestbury Incentives 
Limited (4)                50,234          298.6          9,876,243            4.35% 
Richard Grosse(5)         167,448          298.6           282,390             0.12% 
Ian Marcus                 2,680           298.6            51,023             0.02% 
 
 

(1) Shares subscribed through a corporate entity called Yoginvest Limited, a company which is ultimately controlled by Nick Leslau. In addition, Nick Leslau is interested in PIHL Property LLP as set out in (3) below and is a beneficiary of the Saper Trust which holds 57,471 shares in the Company.

(2) Shares subscribed through a corporate entity called Glengrace Limited, a company which is ultimately controlled by Nigel Wray. In addition, Nigel Wray is interested in PIHL Property LLP as set out in (3) below.

(3) In addition to the holdings disclosed above, 22,466,916 shares in the Company are held by PIHL Property LLP. Ultimately, through indirect ownership, Nick Leslau has a 71 per cent interest in those shares and Nigel Wray has a 22 per cent interest.

(4) Prestbury Incentives Limited is a wholly owned subsidiary of the Investment Adviser, Prestbury Investments LLP. Nick Leslau, Mike Brown and Sandy Gumm all have indirect interests in Prestbury Incentives Limited through their interests in the Investment Adviser.

(5) Richard Grosse is a trustee of the Saper Trust (see also note (1)) and accordingly he is disclosed as a related party. He is not a member of the Board or Management Team.

Under the AIM Rules, the subscriptions referred to above constitute related party transactions (the "Prestbury Related Party Transactions").

The independent director of the Company, which for these purposes exclude any director who participated in the Placing, having consulted with Stifel Nicolaus Europe Limited as the Company's Nominated Adviser, considers that the terms of the subscriptions referred to above are fair and reasonable in so far as shareholders of the Company are concerned.

Substantial shareholder participation in the Placing

Artemis Investment Management LLP, on behalf of discretionary funds under management, ("Artemis") and Invesco Asset Management Limited, as agent for and on behalf of its discretionary managed clients, ("Invesco") are considered Substantial Shareholders under the AIM Rules and their participation in the Placing, as set out below, therefore constitutes related party transactions under Rule 13 of the AIM Rules.

 
               Number of          Price per        Number of         Percentage 
             shares acquired     share (pence)      ordinary          of issued 
                under the                          shares held      share capital 
                 Placing                           immediately     held immediately 
                                                    after the         after the 
                                                     Placing           Placing 
Artemis       8,925,296            298.6          44,759,743           19.7% 
Invesco       5,341,594            298.6          25,191,594           11.1% 
 

The Directors, having consulted with Stifel Nicolaus Europe Limited as the Company's nominated adviser, consider that the terms of both Artemis and Invesco's participation in the Placing are fair and reasonable in so far as shareholders of the Company are concerned.

FOR FURTHER INFORMATION, PLEASE CONTACT:

 
 Secure Income REIT Plc 
  Nick Leslau 
  Mike Brown                       [phone] 
  Sandy Gumm                              7647 
 Stifel Nicolaus Europe Limited 
  Mark Young 
  David Arch 
  Peter Lees                       [phone] 
  Tom Yeadon                              7600 
 FTI Consulting 
  Richard Sunderland               [phone] 
  Claire Turvey                           1000 
 

Defined terms used in this announcement shall (unless the context otherwise requires) have the same meaning as set out in the announcement of 8 September 2016.

IMPORTANT INFORMATION

The content of this announcement as been prepared by and is the sole responsibility of the Company.

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 shares or other securities of the Company in any jurisdiction, including the United States, Canada, Japan, South Africa or Australia, in which such offer or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any jurisdiction or otherwise. 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 or 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.

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. The value of the Company's 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), Canada, Japan, South Africa or Australia 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 U.S. Securities Act of 1933, as amended (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 and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. Any offering of the Placing Shares to be made in the United States will be made only to a limited number of "qualified institutional buyers" 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 any public offering and outside the United States in offshore transactions in accordance with Regulation S under the Securities Act. There will be no public offer of the Placing Shares in any jurisdiction, including in the United States, Canada, Japan, South Africa or Australia.

The Placing Shares have not been registered under the applicable securities laws of Canada, Japan, South Africa or Australia and, subject to certain exceptions, may not be offered or sold within Canada, Japan, South Africa or Australia or to any national, resident or citizen of Canada, Japan, South Africa or Australia.

This 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 this 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 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 the announcement to reflect any change in events, conditions or circumstances on which any such statements are based after the time they are made.

Neither the Company nor any other person accepts any responsibility to update the information in this announcement after its issue.

Stifel, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as sole bookrunner and nominated adviser in 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 this announcement 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 does not accept any responsibility whatsoever, and makes no representation or warranty, express or implied, in relation to the contents of this 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 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 this announcement or any such statement.

Neither the content of the Company's website nor any information accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

This information is provided by RNS

The company news service from the London Stock Exchange

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October 04, 2016 02:00 ET (06:00 GMT)