Further to Regional REIT’s (RGL’s) announcement on 17 May 2019 that it was considering an equity fundraise “to take advantage of its growing near-term pipeline of opportunities”, the company has announced proposals for a £50m fund raising. The proposed fundraise will comprise a Placing, Open Offer, Offer for Subscription and Intermediaries Offer.
In summary, RGL proposes to issue up to 46,948,357 new ordinary shares in a capital raising that is targeting gross proceeds of approximately £50 million. Qualifying Shareholders will be offered the opportunity to participate in the Open Offer on the basis of 1 New Ordinary Share for every 8 Existing Ordinary Shares. Qualifying Shareholders will also be offered the opportunity to subscribe for New Ordinary Shares in addition to their Open Offer Entitlements under the Excess Application Facility. The Board has reserved the right to increase the size of the Capital Raising by up to 46,948,357 New Ordinary Shares. The Issue Price is 106.5 pence per New Ordinary Share, which represents a discount of 1.8% to the Closing Price per Ordinary Share on 21 June 2019 of 108.4 pence per Ordinary Share. The Issue Price represents a discount of 7.8% to the audited EPRA Net Asset Value per Ordinary Share as at 31 December 2018 of 115.5 pence per Ordinary Share.
The company says that negotiations are ongoing concerning the acquisition of a geographically-diverse portfolio of six office assets, which provide a range of interesting asset management opportunities for Regional REIT. The manager, London & Scottish Property Investment Management Limited, says that it has identified a significant pipeline of assets (in excess of £500 million), including the above mentioned six office assets, which meet RGL’s investment objective and policy and which could, it believes, be acquired in a relatively short time frame.
This summary should be read in conjunction with the full text of the announcement and the Prospectus, when available.
Comments from Kevin McGrath, Chairman of Regional REIT
“The Board of Regional REIT is delighted to be announcing this fundraise to support the next period of growth for the Group. The investment strategy of the Group has returned considerable income returns together with capital growth for Shareholders and, together with the Asset Manager’s active property management approach, we look forward to continuing to meet the investment criteria of the Company for both existing and new Shareholders.”
Comments from Stephen Inglis, Chief Executive Officer of London & Scottish Property Investment Management Limited
“We have identified a substantial pipeline of potential deals at prices where we can readily achieve the returns we target for the Company and in a market with fewer investors for the type of assets we are currently reviewing. We continue to see beneficial occupational supply/demand dynamics in our core markets and expect this to continue. We are announcing this fundraise to maximise potential returns from the strong opportunities that we are seeing in our markets and we look forward to updating the market further on our progress in the coming months.”