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4 days 5 hours ago

Atlantic Leaf Properties Limited has announced that it has entered into an implementation agreement with South Downs Investment LP, an affiliate of certain investment funds (the “Apollo Funds”) managed by affiliates of Apollo Global Management, Inc. (NYSE:APO) (together with its consolidated subsidiaries, “Apollo”).

The acquisition is intended to be implemented by way of a Jersey Court sanctioned scheme of arrangement and is subject to the approval of Atlantic Leaf shareholders.

Under the terms of the agreement, South Downs Investments will acquire all the issued and to be issued share capital of Atlantic Leaf for an aggregate cash consideration of approximately GBP 152 million or 80.5 GBP pence per Atlantic Leaf Share (the “Scheme Consideration”). When aggregated with the May 2020 distribution of 4.5 GBP pence per share, Atlantic Leaf shareholders would receive 85.0 GBP pence per share.

The Scheme Consideration of 80.5 pence is equivalent to R17.30 per Atlantic Leaf share (based on the GBP/Rand exchange rate of R21.49 as at the close of markets on 21 May, being the last business day prior the announcement) and represents a premium of approximately 33.1% to the closing price of R13.00 per Atlantic Leaf share on 21 May 2020, and a premium of approximately 44.5% to the dividend-adjusted VWAP of R11.97 for the 30-day trading period up to and including 21 May.

The Independent Directors of Atlantic Leaf have considered the acquisition and Scheme Consideration, and their preliminary unanimous recommendation is that Atlantic Leaf Shareholders vote in favour of the acquisition as they have irrevocably undertaken to do in respect of their own shares. Vukile Property Fund – the Company’s largest shareholder – has also irrevocably undertaken to vote in favour of the acquisition in respect of its 34.9% shareholding.

Commenting on the rationale for the acquisition, Paul Leaf-Wright, CEO of Atlantic Leaf Properties said, “Despite facing various challenges in the UK real estate market, Atlantic Leaf has consistently generated attractive dividend returns by ensuring that it acquired well tenanted, strategically located assets that have offered rental growth from a relatively defensive asset base. However, the challenging environment in both South Africa and the United Kingdom has seen continued market uncertainty, particularly surrounding Brexit and more recently the Covid-19 pandemic. Limited support for capital raises and reduced liquidity has put pressure on Atlantic Leaf’s share price, which in turn has made it uneconomic to raise new capital to fund portfolio growth. Share prices of listed property companies have fallen considerably and the wider property sector is expected to face continued headwinds in the near future. Vukile Property Fund Limited, our largest shareholder, has also stated their intention to dispose of their stake in Atlantic Leaf, adding further pressure on our share price.”

Peter Bacon, Chairman of Atlantic Leaf Properties commented, “Whilst the board of Atlantic Leaf remains confident regarding the underlying strength and prospects of the business, it believes that the Acquisition provides shareholders with a fair and reasonable consideration for their Atlantic Leaf Shares in the context of current market dynamics, and represents an attractive opportunity to realise their investments in the near term, in cash, and at a significant premium to the price at which Atlantic Leaf Shares have traded over an extended period of time. The Apollo Funds will bring a sizeable capital base, access to captive funding, execution resources and deep experience of investing in real estate portfolios, all which will contribute towards improved performance during uncertain times.”

Skardon Baker, Senior Partner at Apollo and Head of the European Principal Finance (“EPF”) Funds leading the investment, commented, “We believe that Atlantic Leaf, as a UK REIT focused predominantly on investments in the UK industrial and logistics sector, is well positioned with a defensive asset base and fits with EPF’s historical practice of providing solutions to corporate structures underpinned by real assets.” Edward Jones, Partner in EPF, added: “We intend for Atlantic Leaf to remain an externally managed vehicle and it is anticipated that a new management company will be incorporated by members of the existing management team to act as the external manager after the completion date, and we look forward to working with the management team to support the company in its next phase of growth.

5 days 23 hours ago
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1 week ago

JSE REIT Stor-Age has recently closed an accelerated bookbuild.

The significantly oversubscribed bookbuild saw R250 million of equity raised at a price of R11.85 per share, representing a 4.3% discount to the 30-day volume weighted average traded price. The capital raised will allow Stor-Age to continue taking advantage of development and acquisition opportunities in both South Africa and the United Kingdom.

Comments Stor-Age CEO Gavin Lucas, “We are pleased with the significant appetite shown for Stor-Age stock and believe it is a strong vote of confidence in the business and its strategy. These are certainly very challenging times for all South African businesses and the local REIT sector has been under significant pressure for some time. When taking this into consideration, it certainly does put the success of today’s raise into perspective.

Adds Lucas, “Stor-Age and the self storage business model have a track record of resilience in constrained economic environments. While there is little doubt about the pending significant contraction in the economy in both SA and the UK, the primary drivers of demand for our product are life-changing events and / or dislocation, be they positive or negative in nature. Demand is further supported by the fluctuation of economic conditions. Our customers typically require the product either temporarily or permanently for various reasons throughout the economic cycle. This creates a market depth that is a significant contributing factor towards the resilience of the self storage product.

Stor-Age is well positioned to benefit in the medium to long-term from the rapid acceleration of change brought about by the current crisis: “Stor-Age entered the current cycle from a position of strength and we continue to benefit from a high quality property portfolio spread across both SA and the UK, a very well-managed balance sheet and deep sector specialisation.”

Subject to approval by the JSE Limited, listing and trading of the Bookbuild Shares is expected to commence at 09h00 on Tuesday, 26 May 2020.