REG - abrdn Property Inc. abrdn Property Inc. - Publication of Circular and Notice of GM

abrdn Property Income TrustAnnouncement

14/05/2024 09:00

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RNS Number : 3208O  abrdn Property Income Trust Ltd  14 May 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

 

 

FOR IMMEDIATE RELEASE

 

14 May 2024

 

 

abrdn Property Income Trust Limited

 

(a non-cellular company limited by shares incorporated in Guernsey with
registration number 41352)

 

LEI Number: 549300HHFBWZRKC7RW84

Publication of Circular and Notice of General Meeting

Further to abrdn Property Income Trust Limited's ("API" or the "Company")
previous announcements and as set out in the recently published Annual Report
and Accounts for the financial year ended 31 December 2023, the Board of API
announces that a circular ("Circular") to convene a general meeting of API
Shareholders (the "General Meeting") will be published today and sent to API
Shareholders to allow them to consider and, if thought fit, approve a change
to API's investment policy in order to implement a Managed Wind-Down.

Under the proposed Managed Wind-Down process, the Company will be managed with
the intention of realising all of the assets in its portfolio in an orderly
manner, with a view to repaying borrowings and making timely returns of
capital to Shareholders whilst aiming to obtain the best achievable value for
the Company's assets at the time of their realisations. Pursuant to its
comprehensive review of API's strategic options, the Board believes that a
Managed Wind-Down is now the best means of maximising value for API
Shareholders, given the challenges API would continue to face as a standalone
company and the potential to dispose of API's assets in the direct property
market at higher values than those implied by API's share price.

The required change to API's investment policy is conditional on the approval
of API's Shareholders. To approve the change in investment policy,
shareholders who together represent a majority of the API shares voted at the
General Meeting (whether in person or by proxy) must vote to approve the
resolution put to the General Meeting. API Shareholders should read the whole
of the Circular, in particular, the letter from the Chair, which contains the
unanimous recommendation from the API Board that API Shareholders vote in
favour of the changes to the Company's investment policy.

While the timeline for disposals will depend on the market environment,
realisation of all of the Company's assets and the return of proceeds to API
Shareholders is expected to take place over an 18-36 month period, assuming
assets are realised as sales of individual assets or groups of assets, rather
than via a sale of the whole portfolio, which is also a possibility.

At an appropriate point in the Managed Wind-Down process, API will seek
Shareholders' approval to appoint a liquidator to wind up the Company and to
cancel the Company's admission to trading on the Main Market of the London
Stock Exchange. Trading in API Shares will no longer be possible from that
time.

James Clifton-Brown, Chair of API, said:

"API has consistently sought to invest in good quality assets that produce an
attractive level of income and which also have the prospect of income and
capital growth, resulting in an attractive portfolio and consistent
outperformance against the benchmark at the property level.

Nevertheless, API, along with other REITs and diversified investment trusts,
continues to contend with the significant challenges facing the real estate
sector which in API's case are compounded by the relatively small scale of the
Company, resulting in a sustained and substantial trading discount to net
asset value, low share liquidity and a concentrated debt structure.

Pursuant to its comprehensive review of API's strategic options, and
consistent with its previous announcements, the Board believes that a Managed
Wind-Down is now the best means of maximising value and unanimously recommends
that API shareholders vote in favour of the proposed change to API's
investment policy at the forthcoming General Meeting."

Changes to the Investment Manager's Fee

If the change to API's investment policy is approved, the API Board and abrdn
Fund Managers Limited ("abrdn", "Investment Manager"), as the Company's
Investment Manager, intend to amend the terms of abrdn's fee arrangement to
ensure abrdn is appropriately incentivised to maximise the value received from
the Company's assets while aligning interests with those of API's
shareholders.

Details of the proposed changes have been set out in the Appendix to this
announcement and shall, if the General Meeting approves the change to API's
investment policy, be documented in an amendment to the Investment Management
Agreement, effective from 31 May 2024. No other substantive changes are being
made to the management arrangements at this time.

The changes to the fee arrangements fall within Listing Rule 11.1.10R (smaller
related party transactions) and the details set out in this announcement are
being notified in accordance with Listing Rule 11.1.10R(2)(c).

General Meeting

The General Meeting will be held at 10.30 a.m. on 28 May 2024 at the offices
of Addleshaw Goddard LLP at Milton Gate, 60 Chiswell Street, London, EC1Y 4AG.
The expected timetable of principal events in relation to the General Meeting
is as follows:

Event
                                          Time/Date

 Deadline for lodging Forms of Proxy/CREST Proxy instructions  10.30 a.m. on 26 May 2024
 Voting Record Time                                            6.30 p.m. on 26 May 2024
 General Meeting                                               10.30 a.m. on 28 May 2024

The Circular will be made available on the Company's website at
https://www.abrdnpit.co.uk/en-gb/literature
(https://www.abrdnpit.co.uk/en-gb/literature) . For the avoidance of doubt,
neither the contents of this website nor the contents of any websites
accessible from any hyperlinks are incorporated into or form part of this
announcement.

 

The Circular may also be inspected during usual business hours on any weekday
(Saturdays, Sundays and public holidays in the UK and Guernsey excepted) at
the Company's registered address at Trafalgar Court, Les Banques, St. Peter
Port, Guernsey GY1 3QL, or at the offices of Addleshaw Goddard LLP at Milton
Gate, 60 Chiswell Street, London EX1Y 4AG for a period beginning on today's
date until the date of the General Meeting, and at the General Meeting for a
period beginning fifteen minutes before it commences, for the duration of the
General Meeting.

A copy of the Circular will also be submitted to the National Storage
Mechanism, where it will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)

 

Enquiries

abrdn Property Income
Trust

James Clifton-Brown
(Chair)
via Winterflood

Jason Baggaley (Fund
Manager)
+44 7801 039 463

Lazard (Financial Adviser to API)

Patrick
Long
            +44 20 7187 2000

Jolyon Coates

Winterflood (Corporate Broker to API)

Neil
Langford
            +44 20 3100 0160

H/Advisors Maitland (Communications Adviser to API)

James
Benjamin
            +44 20 7379 5151

 

 

Important notices

Lazard & Co., Limited ("Lazard"), which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting exclusively as
financial adviser to API and no one else in connection with the matters
referred to in this announcement and will not be responsible to anyone other
than API for providing the protections afforded to clients of Lazard nor for
providing advice in relation to the matters referred to in this announcement.
Neither Lazard nor any of its affiliates owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, whether in contract,
in tort, under statute or otherwise) to any person who is not a client of
Lazard in connection with this announcement, any statement contained herein or
otherwise.

Winterflood Securities Limited ("Winterflood"), which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom, is acting
exclusively for API and no-one else in connection with the matters set out in
this document and will not be responsible to anyone other than API for
providing the protections afforded to customers of Winterflood or for
providing advice in relation to the matters set out in this document. Neither
Winterflood nor any of its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client of
Winterflood in connection with this document, any statement contained herein
or otherwise.

Capitalised terms used in this announcement have the meanings given to them in
the Circular.

 

Appendix

 

Proposed changes to the Investment Manager's fee

 

The Board and abrdn have agreed a significant reduction in the Investment
Management fee level, and a reduction in the Marketing fee, with the
introduction of a new fee structure. This includes a reduced Investment
Management fee, a "Disposal Fee", an "Incentive Fee" and a "Liquidation Fee",
as described below, which are linked to the value and timing of disposals.

 

For these purposes:

 

"Delisting" means cancellation of the Company's admission to trading on the
Main Market of the London Stock Exchange;

 

"EPRA NTA" means Net Tangible Assets calculated as per EPRA Best Practices
Recommendations Guidelines, October 2019; and

 

"Portfolio Value" means the valuation of the portfolio as at 31 May 2024 on
the basis of the latest valuation information, being as at 31 March 2024.

 

1.   An Investment Management Fee of 0.20% per annum of the average
portfolio value, calculated and paid quarterly in arrears until Delisting, but
to be no less than £50,000 per quarter. abrdn has committed to invest the
Investment Management Fees in API's ordinary shares, while API's share price
is at a discount to EPRA NTA, subject to certain liquidity considerations and
regulatory restrictions.

2.   A Disposal Fee of 0.40% of gross disposal proceeds (being the disposal
proceeds since 31 May 2024) payable in two instalments:

a)       an initial payment of 0.30% of cumulative gross disposal
proceeds since 31 May 2024 once properties which would have represented 90% of
the Portfolio Value have been sold; and

b)       a balancing payment (consisting of the difference between the
total Disposal Fee and the initial payment) once 100% of all properties have
been sold.

3.   An Incentive Fee payable on completion of the Managed Wind-Down
provided that gross disposal proceeds since 31 May 2024 are equivalent to not
less than 90% of the Portfolio Value, consisting of:

a)       0.10% of gross disposal proceeds if 100% of the assets are sold
by 28 May 2025, being 12 months after the General Meeting, or

b)       0.05% of gross disposal proceeds if 100% of the assets are sold
by 28 November 2025, being 18 months after the General Meeting.

4.   A Liquidation Fee of £35,000 per quarter from the time of Delisting
until completion of the liquidation, to cover the costs of managing the
corporate entities and undertaking the liquidation process.

5.   A Marketing Fee of £17,500 per quarter until the appointment of the
liquidator, to manage the Company's website and to engage with the Company's
shareholders.

For the purposes of Chapter 11 of the Listing Rules, such that the proposed
amendments to the management arrangements are classified as a smaller related
party transaction under LR11.1.10R, the combined fees listed above will be
capped at 4.99% of EPRA NTA as at 31 March 2024, although the Board expects
the aggregate fees to be substantially lower than the cap.

 

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