European REIT may be new vehicle for Quidnet. Quidnet said, in its most recent report and accounts, that its sale of the final property asset in the European REIT’s portfolio, La Gaude, located in Nice, France should complete shortly. The net sale proceeds to the company will be approximately EUR5.75 million, being 0.74 cents per share. Consistent with the realisation strategy in place since 2011, the Board intends to make a further cash distribution to shareholders. This will follow the Annual General Meeting of the Company on 29 June 2017.
Proposal from Quidnet Capital Partners
The Board is also considering a proposal received from Quidnet Capital Partners LLP. This would mean that the company would change its investment objective and strategy to focus on high yielding commercial property. They would actively manage the portfolio to drive investment returns. The strategy is to deliver an attractive total return to shareholders, underpinned by a target a 6+ per cent dividend yield. Quidnet will focus on high income industrial and offices in England and Wales. It believes that these are the sectors and locations which have the highest rental growth prospects. Under the proposal European REIT would appoint Quidnet as the investment manager. It would also undertake a significant equity raise to provide capital to invest in the new investment strategy.
Quidnet is a commercial real estate asset management group, led by Chief Executive Richard Tice. Richard and his team have acquired over GBP430 million of commercial real estate for clients since the middle of 2014. Prior to joining Quidnet, Richard was Chief Executive of CLS Holdings plc, between 2010 and early 2014, during which time the company’s share price increased from GBP4.70 to GBP13.
The Board and Quidnet have signed a heads of terms agreement and will be undertaking a consultation with shareholders and potential new investors in order to ascertain the viability of the proposals. Any change of investment strategy would be conditional on, inter alia, shareholder and regulatory approval.
This consultation is expected to be concluded by early July at which time the company will provide an update to shareholders.
Update 30 June 2017
The Board have concluded the consultation in relation to the potential change in investment strategy announced on 6 June 2017, regarding the proposal received from Quidnet Capital Partners LLP. In light of the current market backdrop and the feedback received from shareholders and potential new investors, the Board has concluded that the interests of shareholders are best served through the Company continuing its orderly realisation, rather than changing its investment objective and strategy in line with the proposal.
Following receipt of the sale proceeds from the disposal of La Gaude, France, the Board intends to make a capital redemption in July, followed by a second redemption in August. Further details of the timing, process and mechanics of this will be notified to shareholders in due course.
Furthermore, the Board intends to apply to both the Financial Conduct Authority for the cancellation of the standard listing of the Company on the Official List and to the London Stock Exchange to cancel the admission to trading of its shares on the Main Market, such cancellation expected to occur by October. Thereafter, the Company expects to appoint a liquidator by the end of the year. The outstanding tax claim in France will continue to be pursued, however the results of this and any potential proceeds therefrom are at this time uncertain.
ERET : European REIT may be new vehicle for Quidnet