Secure Income REIT PLC SIR successfully closes oversubscribed placing (0365I)

TIDMSIR

RNS Number : 0365I

Secure Income REIT PLC

16 March 2018

THIS ANNOUNCEMENT 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.

16 March 2018

Secure Income REIT Plc

(the "Company")

SECURE INCOME REIT SUCCESSFULLY CLOSES OVERSUBSCRIBED GBP315.5 MILLION PLACING FOR GBP436 MILLION ACQUISITIONS

Further to the Company's announcements of 9 March 2018 and 15 March 2018, the board of directors of Secure Income REIT Plc (AIM: SIR), the specialist long term income REIT, is pleased to announce that the Company has successfully raised gross proceeds of GBP315.5 million in a significantly oversubscribed Placing of 86,438,000 Ordinary Shares (the "Placing Shares"), completing the Placing over a week earlier than planned following strong investor demand.

The Placing remains conditional on, inter alia, (i) the approval of the Resolutions by Shareholders at the Company's General Meeting to be held at 2.30 p.m. on 27 March 2018 (or any adjournment thereof); (ii) the Placing Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms; and (iii) Admission becoming effective. It is expected that Admission will become effective, and dealings for normal settlement in the Placing Shares will commence, at 8.00 a.m. on 29 March 2018.

The Placing Shares will be issued at a price of 365.0 pence per Placing Share (the "Placing Price") pursuant to the terms and conditions of the Placing set out in the Company's announcement of 9 March 2018.

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

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

"The GBP315.5 million placing has been oversubscribed and has closed early, which is a testament to the validity of the investment thesis being implemented by a heavily invested, aligned and committed management team. We are very pleased with the significant investor support for this fundraising, with strong demand from a broad range of shareholders. We would like to thank our existing shareholders for their continued support and also to welcome our new investors to the Company. We continue to view the future of the Company with confidence."

Nick Leslau, Chairman of Prestbury Investments LLP, Investment Adviser to the Company, said:

"The proceeds from this placing finance the acquisition of two substantial and attractive off-market portfolios, exchanged simultaneously and at a total gross cost of GBP436 million, which meet the Board's strict investment returns and quality criteria. The acquisitions 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 assets to be acquired complement the Group's existing portfolio of key operating assets in defensive sectors let to strong covenants on long leases, providing income security, the core of the Group's business. The acquisitions include Manchester Arena, the UK's largest indoor entertainment arena, 76 Travelodge hotels and the largest catered event space in the City of London at the Chiswell Street Brewery. Attractive and secure income growth will continue to be delivered from the upwards only RPI reviews and fixed rental uplifts in 99% of the enlarged Group's rent roll, positioning the Group very well to maintain its track record of providing attractive total shareholder returns for the long term.

The Prestbury team will be investing GBP5.1 million in the Placing and, following completion, will have c.GBP158 million (at the Placing Price) invested in the Company, one of the largest management shareholdings in the quoted UK real estate sector."

Related Party considerations

Prestbury and Board participation in the Placing

Members of the Prestbury Management Team and members of the Board and certain of their associates, who own Ordinary Shares at the date of this announcement worth approximately GBP137 million at the Placing Price, have further invested over GBP5.25 million in the Company pursuant to the Placing. These investments are shown in the table below:

 
                                                                     Percentage 
                                                 Number of            of issued 
                            Number of         Ordinary Shares       share capital 
                          Ordinary Shares     held immediately     held immediately 
                          acquired under         after the            after the 
                            the Placing           Placing             Placing(6) 
Board and Management 
 Team 
Nick Leslau(1) 
 (3) (4)                    821,917             1,491,709              0.46% 
Nigel Wray(2) 
 (3)                        273,972              273,972               0.09% 
Martin Moore                 27,397              118,357               0.04% 
Mike Brown(4)               273,972             1,183,581              0.37% 
Sandy Gumm(4)                27,397              192,573               0.06% 
Ian Marcus                   13,698              87,002                0.03% 
Other associated 
 investors 
Richard Grosse(5)           178,100              445,405               0.14% 
 
 

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

(2) In addition to these shares, Nigel Wray is interested in PIHL Property LLP as set out in (3) below.

(3) In addition to the holdings disclosed above, 22,466,916 Ordinary Shares in the Company are held by PIHL Property LLP. Ultimately, through indirect ownership, Nick Leslau has a 47.4 per cent voting interest and a 71.1 per cent economic interest in those Ordinary Shares and Nigel Wray has a 44.6 per cent voting interest and 22.3 per cent economic interest.

(4) Nick Leslau, Mike Brown and Sandy Gumm all have indirect interests in Prestbury Incentives Limited through their interests in the Investment Adviser, Prestbury Investments LLP. Prestbury Incentives Limited is a wholly owned subsidiary of the Investment Adviser. Prestbury Incentives Limited holds 13,183,411 Ordinary Shares in the Company and will receive a further 4,588,479 Ordinary Shares on 20 March 2018 to satisfy existing obligations under the Investment Advisory Agreement, as outlined in the Company's 9 March 2018 preliminary results announcement.

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

(6) Calculated on the sum of (a) 230,536,874 Ordinary Shares currently in issue, (b) 4,588,479 Ordinary Shares to be issued on 20 March 2018 in relation to the Incentive Shares noted in point (4) and (c) 86,438,000 Ordinary Shares to be issued in the Placing.

Under the AIM Rules, the subscriptions referred to above constitute related party transactions.

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

Substantial shareholder participation in the Placing

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

 
                                                                   Percentage 
                                  Number of Ordinary          of issued share 
            Number of Ordinary           Shares held             capital held 
               Shares acquired           immediately              immediately 
             under the Placing     after the Placing     after the Placing(7) 
 
Artemis             14,264,383            59,909,594                    18.6% 
Invesco             14,991,780            40,183,374                    12.5% 
 

(7) Calculated on the sum of (a) 230,536,874 Ordinary Shares currently in issue; (b) 4,588,479 Ordinary Shares to be issued on 20 March 2018 in relation to the Incentive Shares; and (c) 86,438,000 Ordinary Shares to be issued in the Placing

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

Issued Share Capital

Following Admission of the Placing Shares, and in accordance with the Disclosure Guidance and Transparency Rules, the Company's issued share capital will comprise 321,563,353 Ordinary Shares (which includes 4,588,479 Ordinary Shares to be issued to Prestbury Incentives Limited on 20 March 2018 as described in the Company's preliminary results announcement of 9 March 2018). There are no Ordinary Shares held in treasury. Accordingly the total number of voting rights in the Company will be 321,563,353. The above figure may be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the issued share capital of the Company under the Disclosure Guidance and Transparency Rules.

FOR FURTHER INFORMATION, PLEASE CONTACT:

 
 Secure Income REIT Plc                                          [phone] 
  Nick Leslau                                                           7647 
  Mike Brown                                [e-mail] 
  Sandy Gumm 
 Stifel Nicolaus Europe Limited                                  [phone] 
  (Nominated Adviser & Sole Bookrunner)                                 7600 
  Mark Young                               [e-mail] 
  David Arch 
  Tom Yeadon 
 Newgate (PR Adviser)                                            [phone] 
  James Benjamin                                                        6550 
  Anna Geffert                                          [e-mail] 
  Leena Patel 
 

Defined terms used in this announcement shall (unless the context otherwise requires) have the same meaning as set out in the Company's announcement of 9 March 2018.

The Company's LEI is: 213800M1VI451RU17H40

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 issued 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.

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. Investing in shares 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 guaranteed capital protection; and an investment in the Ordinary Shares is suitable only for investors who do not need a guaranteed income or guaranteed 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 (for the purposes of the MiFID II Product Governance Requirements) is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and determining appropriate distribution channels.

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 announcement or any transaction or arrangement referred to herein.

Apart from the responsibilities and liabilities, if any, which may be imposed on Stifel by the FSMA or the regulatory regime established thereunder, Stifel 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.

This information is provided by RNS

The company news service from the London Stock Exchange

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March 16, 2018 11:08 ET (15:08 GMT)