Ediston REIT set to buy £146m UK retail warehouse portfolio

By Paul Norman - Friday, October 06, 2017 9:26

Ediston REIT is set to buy a portfolio of UK retail warehouse parks for £146m.

In a statement Ediston said it has commenced detailed due diligence on the properties. The Company has also commenced discussions with its advisers, lenders and a number of the larger shareholders on the potential approval and funding of the acquisition. T

Under the heads of terms relating to the acquisition, the vendor will receive a material proportion of the consideration in the form of new ordinary shares in the Company.

The balance of the consideration will be funded through a combination of the company's existing cash resources, the proceeds of an open offer to existing shareholders, a placing, and an offer of subscription, including an intermediaries' offer, of new ordinary shares and through debt finance. The issue will be conditional on shareholder approval, as will the Acquisition given its size.

The acquisition, if approved, will increase the company's property portfolio to over £315m.  

The Board is proposing to raise additional equity share capital by offering up to approximately 100 million ordinary shares in the capital of the Company, with priority being given to existing investors who wish to participate in the Issue. It is expected that the Issue will be priced to cover the costs of the transaction and will be designed to protect asset value and income cover of existing investors, regardless of their participation in the Issue. The Board is also expecting to increase the Company's borrowings on similar terms to the existing facilities, although the Company's loan to value is expected to remain within the normal bounds of 30 per cent. loan to value and in any event it will remain within the existing limit of 35 per cent.

If the Acquisition becomes unconditional, the Portfolio is expected to be acquired in early December 2017.

The Company expects to make a further announcement of the progress on the transaction closer to when the formal documentation is ready for publication and will be announcing its unaudited net asset value for the period ended 30 September 2017 in the near future.

William Hill, chairman of Ediston Property Investment Company, commented: "The proposed transaction is entirely consistent with the way in which the Board has signalled its desire to grow the Company. It increases the equity base of the company without cash drag, has the potential to grow NAV per share by adding some interesting assets to the portfolio and is accretive to dividend cover and its quality, the latter being achieved by an increase in the weighted unexpired lease term, covenant strength and diversity of the Company's rental income.

“The Manager has been patient in seeking to acquire a portfolio which matches the "Ediston Style" of assets where it can enhance value with their proven asset management skills. In promoting an acquisition in which the vendor is keen to retain an equity stake and become a wider shareholder in the Company following completion, we have secured an opportunity which offers the parties their mutual objectives.

“Retail warehousing is a sub sector of the market in which the Manager has considerable investment and development experience and the Portfolio has the qualities which fit neatly with Ediston's active asset management style."

pnorman@costar.co.uk

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