Dividend DeclarationRead more
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW OR TO US PERSONS (AS DEFINED IN REGULATION S UNDER THE US SECURITIES ACT OF 1933, AS AMENDED). PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT. THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE INFORMATION. THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF, AND SHOULD NOT BE CONSTRUED AS, AN OFFER FOR SALE OR SUBSCRIPTION OF, OR SOLICITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR, ANY ORDINARY SHARES IN THE COMPANY, IN ANY JURISDICTION, INCLUDING THE UNITED STATES, NOR SHALL IT, OR ANY PART OF IT, OR THE FACT OF ITS DISTRIBUTION, FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY CONTRACT OR INVESTMENT DECISION WHATSOEVER, IN ANY JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A RECOMMENDATION REGARDING ANY SECURITIES. ANY INVESTMENT DECISION MUST BE MADE EXCLUSIVELY ON THE BASIS OF THE PROSPECTUS TO BE PUBLISHED BY THE COMPANY IN CONNECTION WITH THE PLACING AND OPEN OFFER.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014).
24 January 2019
The Board of Directors (the “Directors”) of Tritax Big Box REIT plc (ticker: BBOX) announces that DBS HoldCo, a wholly-owned subsidiary of the Company, has conditionally agreed to acquire an 87 per cent. economic interest in db Symmetry (the “Acquisition”), which owns one of the UK’s largest strategic land portfolios for the development of Big Box real estate assets and related logistics facilities.
Created in 1996, db Symmetry has evolved to become one of the leading independent privately owned logistics development companies in the UK. The enterprise value attributed to db Symmetry by the Acquisition is £370 million, subject to certain adjustments in respect of cash, debt, working capital, tax and other operational liabilities.
The portfolio of New Assets includes both consented and strategic land, offering the Company phased access to a total new land portfolio of over 2,500 acres which the Board, the Proposed Director and the Manager believe will be capable of delivering approximately 38.2 million sq. ft. of Big Box assets across key logistics locations in the UK (subject to planning, as necessary), complementing the Company’s existing portfolio of 29.8 million sq. ft.
The consideration for the Acquisition will be approximately £202.4 million in cash (in respect of 69.1 per cent. of the equity value of db Symmetry) and approximately £52.6 million in Consideration Shares (in respect of 17.9 per cent. of the equity value of db Symmetry) to be issued to DV4 Properties and DBS Senior Management following completion of the Acquisition at a price per share equal to the Issue Price. DBS HoldCo will also procure the repayment of approximately £67.7 million of deep discounted bonds owed by db symmetry to DV4 Properties and certain of its affiliates, which have been used to fund land acquisitions, construction, developments and associated costs in relation to the portfolio of New Assets to date.
To ensure long-term alignment between DBS Senior Management and the Company, DBS Senior Management will retain a 13 per cent. economic interest in db Symmetry following completion of the Acquisition which will be satisfied by the issuance of B Shares and C Shares in DBS HoldCo, representing consideration for the Acquisition of approximately £38.1 million.
In order to fund the Acquisition and further investments in accordance with its Investment Policy, the Company is proposing to raise approximately £250 million (before expenses) through the Issue which comprises the Placing and the Open Offer, of, in aggregate, 192,291,313 New Ordinary Shares at an Issue Price of 130 pence per New Ordinary Share. The Acquisition is expected to complete on 19 February 2019.
Jefferies International Limited (“Jefferies”) and Akur Limited (“Akur”) are acting for the Company in relation to the Issue and Lazard & Co., Limited (“Lazard”) is acting for the Company in relation to the Acquisition.
Any capitalised terms used but not otherwise defined in this announcement have the meaning set out in Appendix II to this announcement.
The Board, the Proposed Director and the Manager believe that, as a result of the scarcity of land at major logistics locations in the UK, the portfolio of New Assets will provide a significant commercial and competitive advantage for the REIT Group in the future.
The Directors and the Proposed Director believe that the principal benefits of the Acquisition to Shareholders will be as follows:
The Issue comprises the Placing and Open Offer, of, in aggregate, 192,291,313 New Ordinary Shares at the Issue Price of 130 pence per New Ordinary Share.
The Issue Price represents a discount of 6.3 per cent. to the closing price of 138.7 pence per Ordinary Share as at the close of business on 23 January 2019 and a discount of 9.6 per cent. to the unaudited Basic Net Asset Value per Existing Share of 143.75 pence as at 30 June 2018 (net of the interim dividend of 1.675 pence per Ordinary Share for the period from 1 April 2018 to 30 June 2018 paid on 9 August 2018), the last published NAV of the Company.
The number of New Ordinary Shares and Consideration Shares to be issued pursuant to the Issue and the Acquisition represents approximately 15.8 per cent. of the Company’s Existing Ordinary Shares. Ordinary Shareholders will experience a dilution to the NAV attributable to their holding of Ordinary Shares of approximately 1.6 per cent. as a result of the issue of New Ordinary Shares and Consideration Shares at a discount to the prevailing Net Asset Value based on the Basic NAV per Existing Share as at 30 June 2018 (as adjusted for the Q2 2018 dividend). In the view of the Board and the Proposed Director, the expected benefits to Shareholders derived from the Acquisition significantly outweigh the dilutive effect of the Issue and the issue of Consideration Shares on the Company’s Net Asset Value.
The New Ordinary Shares to be issued under the Issue, and the Consideration Shares to be issued pursuant to the Acquisition, will rank pari passu in all respects with the Existing Ordinary Shares and each other, including full entitlement to the interim dividend for the quarter ended 31 December 2018 (1.675 pence per Ordinary Share targeted) when declared.
Jefferies has agreed to use reasonable endeavours to procure conditional subscribers for the New Ordinary Shares at the Issue Price. The commitments of these Conditional Placees are subject to clawback in respect of valid applications for New Ordinary Shares by Qualifying Shareholders pursuant to the Open Offer.
Under the Open Offer, an aggregate amount of 192,291,313 New Ordinary Shares will be made available to Qualifying Shareholders at the Issue Price, pro rata to their holdings of Existing Ordinary Shares on the basis of:
3 New Ordinary Shares for every 23 Existing Ordinary Shares held on the Record Date
Qualifying Shareholders that take up all of their Open Offer Entitlements may also apply under the Excess Application Facility for additional New Ordinary Shares that they would otherwise not be entitled to. The Excess Application Facility will be comprised of New Ordinary Shares that are not taken up by Qualifying Shareholders under the Open Offer pursuant to their Open Offer Entitlements.
Subject to the Placing and Open Offer becoming unconditional, any New Ordinary Shares which are not validly applied for in respect of the Open Offer will be issued to Conditional Placees procured by Jefferies at the Issue Price.
To the extent that Jefferies is unable to procure subscribers for any New Ordinary Shares that are not validly taken up by Qualifying Shareholders pursuant to the Open Offer, including in the event that any Conditional Placee fails to take up any or all of the New Ordinary Shares which have been allocated to it or which it has agreed to take up at the Issue Price, Jefferies has agreed, on the terms and subject to the conditions set out in the Placing Agreement, to subscribe for such New Ordinary Shares itself at the Issue Price.
The Issue is conditional upon, inter alia, Admission of the New Ordinary Shares to be issued pursuant to the Issue occurring no later than 8.00 a.m. on 13 February 2019 (or such later time and/or date as the Company and Jefferies may agree) and the Placing Agreement not being terminated prior to Admission and becoming unconditional (save for the condition relating to Admission) in accordance with its terms.
The Issue is not conditional on completion of the Acquisition. The Issue may therefore complete while the Acquisition does not. In the event that Admission of the New Ordinary Shares is effected but completion of the Acquisition does not occur, the Directors’ current intention is that the Net Proceeds of the Issue will be applied to fund the Company’s pipeline of other investment opportunities.
Application will be made for the New Ordinary Shares to be issued pursuant to the Issue and, in due course, the Consideration Shares to be issued pursuant to the Acquisition to be admitted to the premium segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities.
The Directors have adopted, and expect to continue to maintain, a progressive dividend policy with a target dividend of 6.7 pence per Ordinary Share for the year ended 31 December 2018, payable quarterly, representing a 4.7 per cent. increase in the total dividend of 6.4 pence declared for 2017, in excess of the rate of RPI inflation over the period from 1 January 2017 to 31 December 2017 and representing a dividend yield of 5.2 per cent. on the Issue Price of 130 pence³.
1 Including a recently completed building in Doncaster which is currently being marketed
2 This is a target only and not a profit forecast. There can be no assurance that this target will be met and it should not be taken as an indication of the Company’s expected or actual future results. This target is based on the Manager’s assumptions regarding, inter alia, timing of development projects, future costs of such developments and potential rental income
3 This target dividend is a target only and not a profit forecast. There can be no assurance that this target will be met and it should not be taken as an indication of the Company’s expected or actual future results. Accordingly, potential investors should not place any reliance on this target in deciding whether or not to invest in the Company and should decide for themselves whether or not the target dividend yield is reasonable or achievable
Further details of the Issue, the Acquisition and Admission will be set out in the Prospectus which is expected to be published tomorrow and will be available on the Company’s website at www.tritaxbigbox.co.uk and for inspection at the offices of Taylor Wessing LLP, 5 New Street Square, London EC4A 3TW.
A copy of the Prospectus will be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM.
The Open Offer
|Record Date for entitlements under the Open Offer||close of business on
23 January 2019
|Open Offer Application Forms despatched to Qualifying Non-CREST Shareholders||25 January 2019|
|Ex-entitlement date for the Open Offer||25 January 2019|
|Open Offer Entitlements credited to stock accounts in CREST of Qualifying CREST Shareholders||28 January 2019|
|Recommended latest time for requesting withdrawal of Open Offer Entitlements from CREST |
(i.e. if your Open Offer Entitlements are in CREST and you wish to convert them to certificated form)
|4.30 p.m. on
4 February 2019
|Latest time and date for depositing Open Offer Entitlements into CREST||3.00 p.m. on
5 February 2019
|Latest time and date for splitting of Open Offer Application Forms (to satisfy bona fide market claims only)||3.00 p.m. on
6 February 2019
|Latest time and date for receipt of completed Open Offer Application Forms and payment in full under the |
Open Offer or settlement of relevant CREST instructions (as appropriate)
|11.00 a.m. on
8 February 2019
Other key dates
|Allocation of New Ordinary Shares under the Placing and Open Offer||8 February 2019|
|Announcement of the results of the Issue||11 February 2019|
|Admission of the New Ordinary Shares to the Official List and to trading on the London Stock Exchange’s |
main market for listed securities
|8.00 a.m. on
13 February 2019
|Crediting of CREST stock accounts||13 February 2019|
|Share certificates despatched (where appropriate)||week commencing
25 February 2019
(or as soon as possible
|Completion of the Acquisition||19 February 2019|
|Admission of the Consideration Shares to the Official List and to trading on the London Stock Exchange’s |
main market for listed securities
|as soon as
19 February 2019
The dates and times specified above are subject to change without further notice. All references to times in the Prospectus will be to London time unless otherwise stated. In particular the Board may, with the prior approval of the Manager and the Joint Financial Advisers, bring forward (to the extent permitted to do so under the Open Offer timetable) or postpone the closing time and date for the Issue. In the event that such date is changed, the Company will notify investors who have applied for New Ordinary Shares of changes to the timetable either by post, by electronic mail or by the publication of a notice through a Regulatory Information Service.
|ISIN for the Ordinary Shares||GB00BG49KP99|
|SEDOL for the Ordinary Shares||BG49KP9|
|ISIN for the Open Offer Entitlements of Ordinary Shares||GB00BHTD2V31|
|SEDOL for the Open Offer Entitlements of Ordinary Shares||BHTD2V3|
|ISIN for the Excess CREST Open Offer Entitlements of Ordinary Shares||GB00BHTD2W48|
|SEDOL for the Excess CREST Open Offer Entitlements of Ordinary Shares||BHTD2W4|
Colin Godfrey (Partner, Fund Manager) – via Maitland/AMO below
Maitland/AMO (PR Adviser)
Tel: 07747 113 930
Jefferies International Limited (Sponsor, Joint Financial Adviser in relation to the Issue and Sole Global Coordinator and Bookrunner)
Tel: 020 7029 8000
Akur Limited (Joint Financial Adviser in relation to the Issue)
Tel: 020 7493 3631
Lazard & Co., Limited (Financial Adviser in relation to the Acquisition)
Tel: 020 7187 2000
The Company’s LEI is: 213800L6X88MIYPVR714
DBS HoldCo, a wholly-owned subsidiary of the Company, has conditionally agreed to acquire an 87 per cent. economic interest in db Symmetry, which comprises one of the UK’s largest strategic land portfolios for the development of Big Box assets and related logistics facilities. Created in 1996, db Symmetry has evolved to become one of the leading independent privately owned logistics development companies in the UK. The enterprise value attributed to db Symmetry by the Acquisition is £370 million, subject to certain adjustments in respect of cash, debt, working capital, tax and other operational liabilities. Completion of the Acquisition is conditional on Admission occurring no later than 13 February 2019 or such later date as the parties to the Share Purchase Agreement may agree in writing.
The New Assets
The portfolio of New Assets includes both consented and strategic land, offering the Company phased access to a total new land portfolio of over 2,500 acres which the Board, the Proposed Director and the Manager believe will be capable of delivering approximately 38.2 million sq. ft. of Big Box assets across key logistics locations in the UK (subject to planning, as necessary), complementing the Company’s existing portfolio of 29.8 million sq. ft. The New Assets are concentrated around the main motorway arteries of the UK and primarily around the core locations of the M1, M40 and the North West’s prime M6 and M62 corridors.
The portfolio of New Assets comprises:
|New Assets||No. of Schemes||Net Acres||Sq. ft. (m)|
|– Of which assets currently under construction (see below)||5||29||0.6|
The portfolio of New Assets has been independently valued by Colliers International UK Valuation LLP at, in aggregate, £372.75 million as of 31 December 2018.
Within the portfolio of New Assets, five assets are currently under construction (including a recently completed building at Doncaster which is currently being marketed), all of which are smaller scale logistics assets of less than 164,000 sq ft and which are being developed speculatively (i.e. without a pre-let in place). It is anticipated that these developments will reach practical completion by May 2019.
|New Asset||Location||Size (sq. ft.)||Estimated completion date|
|Asset 1||Doncaster||150,000||Complete but unlet|
|Asset 2||Bicester Phase 1||163,130||March 2019|
|Asset 3||Aston Clinton||83,000||May 2019|
|Asset 4||Aston Clinton||55,000||May 2019|
|Asset 5||Aston Clinton||110,000||May 2019|
The above listed properties are being constructed to an institutional specification and it is anticipated that these assets will either be let during the course of construction or shortly after completion. It is not anticipated that larger scale Big Boxes will be speculatively developed by the REIT Group on any of the other schemes.
The Directors and the Proposed Director expect to develop the remaining New Assets over a period of eight to ten years, depending on the delivery of planning consents and the availability of funding. As with the REIT Group’s current development activities, while site preparation will take place, as necessary, the Directors and the Proposed Director anticipate that vertical construction of future developments will be subject to securing pre-let agreements, except where small scale speculative development is considered appropriate based on factors including the location, site configuration and anticipated occupational demand, subject always to the restrictions of the Company’s Investment Policy.
By developing assets primarily on a pre-let basis, the Company aims to add new high quality, income producing investment properties to its Portfolio over the coming years at an attractive yield on cost, whilst minimising speculative risk.
Under the terms of the various planning consents and development plans for the New Assets, there are a number of related assets, including last mile logistics facilities and smaller warehousing and logistics assets, which will be included in the development of specific schemes. It is the Directors’ and the Proposed Director’s current intention that these properties will be developed and held as investments alongside the REIT Group’s core Big Box assets.
Overview of DBS Manco
DBS ManCo is a newly formed company, established for the sole purpose of managing the development of the New Assets and sourcing further assets on behalf of DBS HoldCo. DBS ManCo is 100 per cent. owned by DBS Senior Management and other senior employees of db Symmetry who will be responsible for the provision of services under the terms of the Development Management Agreement.
The Manager will have oversight of and input into the activities of DBS ManCo. The Manager will also have consent rights in relation to material matters concerning DBS ManCo, including recruitment, retention and removal of key staff members and divergences from the annual budget.
DBS Senior Management has significant experience in UK regional property development, establishing Barwood Developments Limited in 1995 from which db Symmetry was created in a joint venture with a specialist real estate investor.
DBS ManCo will at completion of the Acquisition employ the DBS Senior Management together with a team of 13 other property professionals and a further 11 support staff. Based in the Midlands, with offices in Northampton and Manchester, DBS ManCo has a wide regional network of agents and partners providing access to industrial, logistics and Big Box opportunities. This has facilitated the assembly and development of the New Assets by the team.
DBS Manco Development Management Agreement
On completion of the Acquisition, DBS HoldCo will enter into the Development Management Agreement with DBS ManCo, which will be non-transferable and non-assignable by DBS ManCo and will have a minimum term of eight years. Under the terms of the Development Management Agreement, DBS ManCo will be responsible for managing the development of the New Assets and for advising in relation to the acquisition of further development assets, including overseeing the properties under construction to completion, securing planning for and progressing the design and construction of undeveloped sites, as well as securing tenants. DBS ManCo will also assume responsibility for the administrative, tax, accounting and company secretarial functions of the DBS Group.
DBS ManCo will report directly to DBS HoldCo and the Manager and key decisions in respect of the New Assets and any other properties managed by DBS ManCo in the future will require the approval of DBS HoldCo. The Manager will take responsibility for the management of the New Assets (and any other assets the development of which has been managed by DBS ManCo) once they have reached practical completion and have been let (including any future asset management initiatives on the New Assets) unless a decision is made to sell the New Assets on the open market.
In consideration for the performance of its services under the Development Management Agreement, DBS ManCo will be paid a fee, monthly in arrears, initially calculated on the basis of an annual budget approved by DBS HoldCo for the performance of the services, amounting to an annual figure of £4.8 million for the year ending 31 December 2019. This will essentially cover the running costs of DBS ManCo. DBS HoldCo will also reimburse DBS ManCo in respect of reasonable and proper third party costs incurred in performance of the services. It is expected that a significant portion of DBS ManCo costs will be treated as development costs of the New Assets and capitalised.
There are no other fees, including performance, acquisition, exit or property management fees, payable by DBS HoldCo to DBS ManCo under the Development Management Agreement (although certain benefits are payable to senior management of DBS ManCo by virtue of the 13 per cent. economic interest in DBS HoldCo, further details of which are set out below).
Structure and Consideration
The Company has entered into the Share Purchase Agreement pursuant to which DBS HoldCo has conditionally agreed to acquire db Symmetry for an enterprise value of £370 million, subject to certain adjustments in respect of cash, debt, working capital, tax and other operational liabilities.
db Symmetry is currently owned by DV4 Properties (60 per cent.) and DBS Senior Management and Brit Investments S.A. (40 per cent.). A total of approximately £67.7 million has been advanced to db Symmetry by DV4 Properties and certain affiliates by way of deep discounted bonds, which have been used to fund land acquisitions, construction, developments and associated costs in relation to the portfolio of New Assets to date. Under the terms of the Share Purchase Agreement, DBS HoldCo will procure the repayment of the deep discounted bonds at Completion.
The allocation of consideration for the Acquisition on Completion will be approximately as follows (subject to certain adjustments in respect of cash, debt, working capital, tax and other operational liabilities):
Ownership Structure at DBS HoldCo
On Completion, DBS Senior Management will roll their interests in db Symmetry into a 13 per cent. economic interest in DBS HoldCo, through the issue to them of B Shares and C Shares in DBS HoldCo. The Company will hold an 87 per cent. economic interest in DBS HoldCo on Completion through a holding of A Shares. The B Shares will represent 9.0 per cent. of the economic value of DBS HoldCo and the C Shares will represent 4.0 per cent. of the economic value of DBS HoldCo, in each case as at Completion.
All of the B Shares will be retained by DBS Senior Management, and it is intended that, over time as the business plan progresses, further C Shares will be allotted to other senior members of the DBS ManCo team as part of the management incentivisation arrangements. The issuance of further C Shares will only dilute the holders of C Shares, and will not affect the Company’s shareholding in DBS HoldCo.
The B Shares and C Shares will carry no beneficial entitlement to profits available for distribution to Ordinary Shareholders and will carry no votes at general meetings but, instead, will have put and call options attached to them which can be exercised at certain points in time following completion of the Acquisition resulting in the shares being acquired by the Company in exchange for Ordinary Shares (issued at the lower of market price and Basic Net Asset Value) or cash, or a combination of the two, at the discretion of the Company but provided that, absent option holder consent, the cash element of the price payable cannot be less than 25 per cent.
The price at which such transfers shall take place shall be calculated based on the net asset value of the DBS Group (adjusted so as to take account of the development activities of the DBS Group only, and excluding completed developments that are suitable for retention by the REIT Group as investment assets and to take into account certain transfers of value from the DBS HoldCo Group to the Company) and applying the economic rights attaching to such shares. These arrangements are designed to ensure long-term alignment between DBS Senior Management, senior members of the DBS ManCo team and the Company.
Any issue of Ordinary Shares in the Company in consideration for B Shares and/or C Shares in DBS HoldCo under the terms of the DBS HoldCo Articles at a price below Basic NAV would be dilutive to existing holders of Ordinary Shares, albeit the impact of such dilution would likely be de minimis. In taking any decision in relation to the acquisition of any such shares in DBS HoldCo, and the form of consideration that will be used to satisfy such acquisition, under the provisions of the DBS HoldCo Articles, the Directors will take into account existing Shareholders’ interests and, in particular, will consider any potential dilution to existing Shareholders at the time.
It is anticipated that if the Issue becomes unconditional, completion of the Acquisition will take place on 19 February 2019 and the final consideration figures will be agreed based on db Symmetry accounts prepared as at 31 January 2019.