Proposed portfolio acquisition and capital raising
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE INCLUDING IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR SOUTH AFRICA.
Standard Life Investments Property income Trust Limited
(the "Company")
Proposed portfolio acquisition and capital raising (the "Proposals")
28 September 2015
Introduction and Portfolio
The Board of the Company announces that it has entered into non-legally binding heads of terms to acquire a portfolio of 22 UK commercial properties (the "Portfolio") for a cash consideration of approximately £165 million. The proposed Portfolio is diversified by sector, tenant and region and has a similar income and covenant profile to the Company's existing property portfolio. The Company's investment manager believes that the proposed Portfolio is complementary to the existing portfolio and introduces a number of asset management opportunities that it believes will enhance returns to shareholders. The proposed Portfolio is also expected to enhance the Company's dividend cover.
The proposed acquisition of the Portfolio is subject to the completion of appropriate due diligence and valuations. It is expected that the Portfolio would be acquired by means of the purchase of all of the units in a Jersey Property Unit Trust which currently holds the Portfolio.
Capital raising
The acquisition is also subject to the Company raising additional equity and debt capital which, together with the Company's expected available cash reserves, would be used to fund the cash consideration and expenses of the acquisition. The Board would intend to put in place a new debt facility for up to £75 million in aggregate and has commenced discussions with potential lenders in respect of these facilities. The Board would also intend to undertake a placing of new ordinary shares at a premium to the net asset value per share to raise up to £100 million to fund the balance of the consideration.
Consultation with Shareholders
To date the Company has not incurred any material expenses in connection with the Proposals. The acquisition of the Portfolio and the placing would be subject to Shareholder approval. The Company's advisers will shortly be consulting with larger Shareholders in the Company in respect of the Proposals, including the level of possible demand for new ordinary shares under the proposed placing. Subject to the outcome of that consultation it is expected that material costs will be incurred by the Company in the event that the Proposals do not proceed. The Company's investment manager has agreed to make a contribution to part of those abortive costs.
The Company will make a further announcement in due course in relation to the Proposals. The Board notes that there is no certainty that the Proposals will proceed. However, subject to the outcome of the legal and due diligence processes and the consultation with Shareholders, it is expected that a conditional contract could be exchanged in respect of the Portfolio, and a shareholder circular and prospectus published, within the next couple of months and that the placing and acquisition could complete by the end of the year.
Dick Barfield, Chairman, commented:
"The acquisition of this portfolio of properties identified by our investment manager presents an excellent opportunity to further diversify and grow the Company's property portfolio with properties which are complementary to the existing assets and introduce a number of asset management initiatives to enhance portfolio returns. The acquisition would strengthen the Company's dividend cover and following a successful placing of new shares the liquidity in the Company shares should increase and make the Company more attractive to a wider audience of investors. Whilst the transaction is at an early stage and remains subject to a number of conditions, we very much hope that shareholders will support the Proposals, including the proposed equity fund raising."
All enquiries:
Jason Baggaley/Gordon Humphries, Standard Life Investments
Tel: 0131 245 2833/0131 245 2735
Graeme Caton, Winterflood Investment Trusts
Tel: 020 3100 0268
Douglas Armstrong, Dickson Minto W.S.
Tel: 020 7649 6823
Winterflood Securities Limited, which is authorised and regulated by the Financial Conduct Authority, is acting for the Company and for no-one else in connection with the Proposals and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Winterflood Securities Limited, or for affording advice in relation to the Proposals.
Dickson Minto W.S., which is authorised and regulated by the Financial Conduct Authority, is acting for the Company and for no-one else in connection with the Proposals and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Dickson Minto W.S., or for affording advice in relation to the contents of the Proposals.
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