We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Secure Income Reit Plc | LSE:SIR | London | Ordinary Share | GB00BLMQ9L68 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 461.00 | 461.00 | 461.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
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
Hot Features
Premium
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)
1 Year Secure Income Reit Chart |
1 Month Secure Income Reit Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
