DISCLOSURE UNDER
RULE 2.10(c)(ii) OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE
“CODE”)
NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION.
22 February 2024
Custodian
Property Income REIT plc
(the "Company" or
“CREI”)
Update on
recommended all-share merger with abrdn Property Income Trust
Limited
including
withdrawal of certain letters of intent
The board of directors of CREI (the
“CREI Board”) notes the announcements by abrdn Property Income
Trust Limited (“API”) on 20 February 2024 regarding an indicative
all-share offer for API from Urban Logistics REIT plc (“ULR”) (the
“ULR Offer”) and on 22 February 2024 regarding API’s intention to
adjourn the API Court Meeting and API General Meeting so as to be
reconvened and held on 20 March 2024.
David MacLellan, Chairman of CREI,
commented:
“We acknowledge the API board’s
requirement for time to assess the potential options. We firmly
believe that the rational conclusion of this assessment would be to
maintain its recommendation for the all-share merger with CREI.
This will benefit both sets of shareholders by creating a
well-positioned REIT of enhanced scale, with the opportunity to
participate in the returns from the two complementary portfolios,
with a fully covered and sustainable dividend.”
Compelling
rationale for the Recommended Merger
The CREI Board reaffirms its belief
in the compelling strategic and financial rationale for the
recommended all-share merger of CREI and API (the “Recommended
Merger”) for CREI and API shareholders, including:
-
Income
focus – CREI and API share
an income-focused investment strategy with an emphasis on regional,
below-institutional sized assets that are well-positioned to
capture the rental growth and yield advantage available in order to
generate higher income returns and capital growth for shareholders.
Following the Recommended Merger, CREI will continue its commitment
to paying a fully covered dividend in line with CREI's existing
policy and practice since IPO, which is expected to result in a
7.3% uplift in annual dividends payable to API
Shareholders(1).
-
Diversification
– The Recommended Merger would
bring together two complementary portfolios to create a
differentiated REIT with enhanced diversification by sector, asset,
geography and tenant. The Combined Group is expected to have a
suitable balance between the main commercial property sectors and
the CREI Board confirms that diversification will remain a central
component of the ongoing strategy.
The CREI Board highlights the
following in respect of the potential alternatives to the
Recommended Merger:
-
Mandate
– the API strategy and portfolio is
highly complementary to CREI’s focus on income and diversification.
ULR provides investors a ‘pure play’ on exposure to logistics real
estate, acquiring only ‘last mile’ assets which are well located
close to urban areas(2)
and the ULR Offer states the
combined group would “focus on
the last-mile / last-touch
mid-box area of UK logistics”. The API portfolio is highly diverse across
Industrial (48%), Offices (25%), Retail warehousing (11%), High
street retail (4%) and Other (12%) (% of API’s portfolio by income
as at 31 December 2023)(3).
The CREI Board notes that 52% of the API portfolio (as a % of API's
portfolio by income as at 31 December 2023) does not represent
industrial properties;
-
Disposals
– CREI expects to continue each
company's ongoing programme of asset disposals, subject to
prevailing sector specific market conditions at the time of such
disposals. In contrast the ULR Offer is stated to involve a
“value
optimisation approach for all of the assets outside Logistics and
Retail Warehouses”, such
assets represented 41% of API’s portfolio by income as at 31
December 2023. The CREI Board believes that such an approach would
be unlikely to maximise value for API Shareholders, particularly by
reference to the office sector which comprised c.25% of API’s
portfolio by income as at 31 December 2023; and
-
Offer
values – the share prices of
both CREI and ULR have moved significantly since the ULR Offer.
While it is acknowledged that the ULR Offer is indicative, as at
market close on 21 February 2024 the Recommended Merger represented
a premium to the ULR Offer(4).
CREI General
Meeting
Consistent with the adjournment of
the API shareholder meetings, the CREI Board intends to adjourn the
CREI General Meeting so as to be reconvened and held on 19 March
2024 at 9.30 a.m. at the offices of Deutsche Numis, 45 Gresham
Street, London EC2V 7BF. As required pursuant to CREI's articles of
association, at least seven clear days' notice of the adjourned
meeting will be sent to CREI Shareholders, confirming the time,
location and business of the meeting. Further details of the
revised timetable will be set out by the CREI Board in due
course.
Disclosure under
Rule 2.10(c) of the Code
The CREI Board discloses under Rule
2.10(c) of the Code that CREI has been notified of the withdrawal
of the letters of intent to vote in favour of the Scheme at the API
Court Meeting and the API Resolution at the API General Meeting
given to CREI by Brooks Macdonald Asset Management and Wise Funds
Limited. In aggregate these letters of intent related to 17,260,381
API Shares representing approximately 4.53% of the issued share
capital of API as at 21 February 2024 (being the last practicable
date prior to the date of this announcement)(5).
Expected
Timetable(6)
The CREI Board’s current
expectation for the timetable of principal events in connection
with the Recommended Merger in light of API’s intention to adjourn
the API Court Meeting and API General Meeting is as
follows:
CREI General Meeting
|
19 March 2024
|
API Court Meeting
|
10.00 a.m. on 20 March
2024
|
API General Meeting
|
10.15 a.m. on 20 March
2024(7)
|
Sanction Hearing
|
Late March 2024
|
Effective Date
|
Early April 2024
|
New CREI Shares issued to API
Shareholders, listed and commencement of dealings in the New CREI
Shares on the London Stock Exchange
|
Early April 2024
|
Notes
(1) Based on the Exchange Ratio and
CREI's target dividend of 5.5 pence per share compared to API’s
current annual dividend of 4.0 pence per share. The dividends
referred to above are not intended as a profit forecast or estimate
for CREI or API for any period and no statement in this document
should be interpreted to mean that earnings or earnings per CREI
Share or per API Share for the current or future financial years
would necessarily match or exceed the historical published earnings
or earnings per CREI Share or per API Share.
(2) Source:
https://www.urbanlogisticsreit.com/about-us/our-unique-business-model/.
(3) Data as per the Scheme Document
in relation to the Recommended Merger published by API on 1
February 2024. Income relates to aggregate of passing rent for
occupied assets and estimated rental value for vacant assets.
'Other' sectors include: leisure, data centres, student housing,
hotels (and apart-hotels) and healthcare.
(4)
|
CREI
|
ULR
|
Issued share capital as at 21
February 2024
|
440,850,398
|
471,975,411
|
Closing price as at 21 February
2024
|
72.7p
|
118.6p
|
ULR special dividend
|
|
(2.45p)
|
Exchange ratio
|
0.78
|
0.47
|
Implied offer value per
share
|
56.7p
|
54.5p
|
Premium of
Recommended Merger to ULR Offer
|
+4.1%
|
|
Source: All closing prices
sourced from Bloomberg.
(5) The total number of API Shares
which remain subject to irrevocable undertakings received by CREI
from API Directors and letters of intent received by CREI from
other API Shareholders is 9,532,864 API Shares, representing
approximately 2.50% of the issued share capital of API as at 21
February 2024 (being the last business day prior to the date of
this announcement).
(6) References to times are to
London time. These times and dates are indicative only and will
depend, among other things, on the date upon which the Court
sanctions the Scheme and the date on which the Conditions are
satisfied or, if capable of waiver, waived. If any of the dates
and/or times in this expected timetable change, the revised dates
and/or times will be notified by announcement through an
RIS.
(7) The API General Meeting will
commence at 10.15 a.m. on the day of the API Court Meeting or as
soon thereafter as the API Court Meeting has been concluded or
adjourned.
Capitalised terms used in this
announcement, unless otherwise defined, shall have the meanings
given to them in the Scheme Document in relation to the Recommended
Merger published by API on 1 February 2024.
Enquiries
Custodian
Property Income REIT plc
David MacLellan (Chair)
|
via Deutsche Numis
|
Deutsche
Numis
(Financial
Adviser and Corporate Broker to CREI)
Nathan Brown
Stuart Ord
Alexander Kladov
George Shiel
|
+44 20 7260 1000
|
FTI
Consulting
(Financial PR
Adviser to CREI)
Richard Sunderland
Andrew Davis
Oliver Parsons
|
+44 20 3727 1000
|
Important
Notices
Numis Securities
Limited (which is trading for these purposes as Deutsche Numis)
("Deutsche
Numis"),
which is authorised and regulated by the Financial Conduct
Authority in the United Kingdom, is acting exclusively for CREI and
for no one else in connection with the Recommended Merger and/or
any other matter referred to in this announcement and will neither
regard any other person as its client nor be responsible to anyone
other than CREI for providing the protections afforded to its
clients or for providing advice in connection with the Recommended
Merger, the contents of this announcement, or any other matters
referred to in this announcement. Neither Deutsche Numis nor any of
its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct, indirect, consequential,
whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Deutsche Numis in connection with
this announcement, any statement or other matter or arrangement
referred to herein or otherwise.
Further
information
This
announcement is not intended to and does not constitute an offer to
sell or the solicitation of an offer to subscribe for or buy or an
invitation to purchase or subscribe for any securities or the
solicitation of any vote in any jurisdiction.
No person should
construe the contents of this announcement as legal, financial or
tax advice. If you are in any doubt about the contents of this
Announcement or the action you should take, you are recommended to
seek your own independent financial advice immediately from your
stockbroker, bank manager, solicitor, accountant or from an
independent financial adviser duly authorised under FSMA if you are
resident in the United Kingdom, or another appropriately authorised
independent financial adviser, if you are in a territory outside
the United Kingdom.
The release,
publication or distribution of this announcement in jurisdictions
outside the United Kingdom may be restricted by law and therefore
persons into whose possession this announcement comes should inform
themselves about, and observe such restrictions. Any failure to
comply with such restrictions may constitute a violation of the
securities law of any such jurisdiction.
Forward-looking
statements
This
announcement, oral statements made regarding the Recommended
Merger, and other information published by CREI and API contain
statements about CREI, API and/or the Combined Group that are or
may be deemed to be "forward-looking statements". All statements
other than statements of historical facts included in this
announcement, may be forward-looking statements. Forward-looking
statements are prospective in nature and are not based on
historical facts, but rather on current expectations and
projections of CREI and API about future events, and are therefore
subject to risks and uncertainties which could cause actual results
to differ materially from the future results expressed or implied
by the forward-looking statements.
The
forward-looking statements contained in this announcement include
statements relating to the expected effects of the Recommended
Merger on CREI and API, the expected timing and scope of the
Recommended Merger and other statements other than historical
facts. Often, but not always, forward-looking statements can be
identified by the use of forward-looking words such as "plans",
"expects" or "does not expect", "is expected", "is subject to",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "should", "would",
"might" or "will" be taken, occur or be achieved. Forward looking
statements include statements relating to the following: (i) future
capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend
policy, losses and future prospects; and (ii) business and
management strategies and the expansion and growth of CREI's or
API's or the Combined Group's operations and potential synergies
resulting from the Recommended Merger.
Although CREI
and API believe that the expectations reflected in such
forward-looking statements are reasonable, neither CREI nor API can
give assurance that such expectations will prove to be correct. By
their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future.
There are a
number of factors that could cause actual results and developments
to differ materially from those expressed or implied by such
forward-looking statements. These factors include, but are not
limited to: the ability to complete the Recommended Merger; the
ability to obtain requisite regulatory and shareholder approvals
and the satisfaction of other Conditions on the proposed terms;
changes in the global political, economic, business and competitive
environments and in market and regulatory forces; changes in future
exchange and interest rates; changes in tax rates; future business
combinations or disposals; changes in general economic and business
conditions; changes in the behaviour of other market participants;
the anticipated benefits from the Recommended Merger not being
realised as a result of changes in general economic and market
conditions in the countries in which CREI and API operate; weak,
volatile or illiquid capital and/or credit markets; changes in the
degree of competition in the geographic and business areas in which
CREI and API operate; and changes in laws or in supervisory
expectations or requirements. Other unknown or unpredictable
factors could cause actual results to differ materially from those
expected, estimated or projected in the forward-looking statements.
If any one or more of these risks or uncertainties materialises or
if any one or more of the assumptions proves incorrect, actual
results may differ materially from those expected, estimated or
projected. Such forward-looking statements should therefore be
construed in the light of such factors.
Neither CREI nor
API, nor any of their respective associates or directors, officers
or advisers, provides any representation, assurance or guarantee
that the occurrence of the events expressed or implied in any
forward-looking statements in this announcement will actually
occur. Given the risks and uncertainties, you are cautioned not to
place any reliance on these forward-looking statements. Other than
in accordance with their legal or regulatory obligations, neither
CREI nor API is under any obligation, and each of CREI and API
expressly disclaim any intention or obligation, to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
Disclosure
Requirements of the Code
Under Rule
8.3(a) of the Code, any person who is interested in 1 per cent. or
more of any class of relevant securities of an offeree company or
of any securities exchange offeror (being any offeror other than an
offeror in respect of which it has been announced that its offer
is, or is likely to be, solely in cash) must make an Opening
Position Disclosure following the commencement of the Offer Period
and, if later, following the announcement in which any securities
exchange offeror is first identified.
An Opening
Position Disclosure must contain details of the person’s interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) of the Code applies must be made by no
later than 3.30 p.m. (London time) on the 10th business day (as
defined in the Code) following the commencement of the offer period
and, if appropriate, by no later than 3.30 p.m. (London time) on
the 10th business day (as defined in the Code) following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule
8.3(b) of the Code, any person who is, or becomes, interested in 1
per cent. or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange offeror. A
Dealing Disclosure must contain details of the dealing concerned
and of the person’s interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the
extent that these details have previously been disclosed under Rule
8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b)
of the Code applies must be made by no later than 3.30 p.m. (London
time) on the business day (as defined in the Code) following the
date of the relevant dealing.
If two or more
persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in
relevant securities of an offeree company or a securities exchange
offeror, they will be deemed to be a single person for the purpose
of Rule 8.3 of the Code.
Opening Position
Disclosures must also be made by the offeree company and by any
offeror and Dealing Disclosures must also be made by the offeree
company, by any offeror and by any persons acting in concert with
any of them (see Rules 8.1, 8.2 and 8.4 of the Code).
Details of the
offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures
must be made can be found in the Disclosure Table on the Panel’s
website at www.thetakeoverpanel.org.uk, including details of the
number of relevant securities in issue, when the Offer Period
commenced and when any offeror was first identified. You should
contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129
if you are in any doubt as to whether you are required to make an
Opening Position Disclosure or a Dealing Disclosure.
Publication
on Website
In accordance
with Rule 26.1 of the Code, a copy of this announcement will be
made available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, on CREI's website at
https://custodianreit.com/proposed-all-share-merger-with-abrdn-property-income-trust-limited/
by no later than 12 noon (London time) on the first Business Day
following the date of this announcement.
Rounding
Certain figures
included in this announcement have been subjected to rounding
adjustments.