Standard Life Investments Property Income Trust (SLI), managed by Jason Baggaley (pictured), has entered into a heads of terms to acquire a portfolio of 22 UK commercial properties for approximately £165m. Subject to completion of the appropriate due diligence and valuations, the company says it expects that the portfolio will be acquired through the purchase of all of the units in a Jersey Property Unit Trust, which currently holds the portfolio. SLI’s manager believes that the proposed portfolio is complementary to SLI’s existing portfolio and introduces a number of asset management opportunities that it believes will enhance returns to shareholders. The proposed portfolio acquisition is also expected to enhance the SLI’s dividend cover and is said to have a similar income and covenant profile to SLI’s existing property portfolio.
The portfolio acquisition is also subject to SLI 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 have said they intend to put in place a new debt facility for up to £75 million in aggregate and have commenced discussions with potential lenders. The Board have also said they intend to undertake a placing of new ordinary shares at a premium to the net asset value per share to raise up to £100m to fund the balance of the consideration.
The company has said that it has not yet incurred any material expenses in connection with the proposed portfolio purchase and fund raising and that both will be subject to shareholder approval. The company’s advisers will be consulting larger shareholders shortly and, following that consultation, it is expected that material costs will be incurred by SLI in the event that the proposals do not proceed. However, SLI’s manager has agreed to make a contribution to part of those abortive costs. Further announcements will be made in due course. However, it is expected that both a conditional contract for the portfolio acquisition and a shareholder circular and prospectus will be published, within the next couple of months. Thereafter it is expected that the placing and acquisition could complete by the end of the year.
Standard Life Property Income proposing portfolio acquisition and fund raising : SLI