RCS - M7 Box+ REIT PLC - INTENTION TO FLOAT

B&M European Value Retail SAAnnouncement

13/03/2023 13:00

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RNS Number : 7783S  M7 Box+ REIT PLC  13 March 2023

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CONTAINED HEREIN DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER TO ISSUE OR
SELL, OR ANY SOLICITATION OF ANY OFFER TO SUBSCRIBE OR PURCHASE, ANY
INVESTMENTS IN ANY JURISDICTION.

This announcement is an advertisement for the purposes of the Prospectus
Regulation Rules of the UK Financial Conduct Authority ("FCA") and is not a
prospectus. This announcement does not constitute or form part of, and should
not be construed as, an offer for sale or subscription of, or solicitation of
any offer to subscribe for or to acquire, any ordinary shares in M7 Box+ REIT
PLC in any jurisdiction, including in or into the United States, Australia,
Canada, Japan or the Republic of South Africa. Investors should not subscribe
for or purchase any ordinary shares referred to in this announcement except on
the basis of information in the admission document (the "Admission Document")
in its final form, to be published by M7 Box+ REIT PLC in connection with the
proposed admission of its ordinary shares to the wholesale market of the
International Property Securities Exchange ("IPSX").

 

M7 Box+ REIT plc

INTENTION TO FLOAT £228.9 MILLION E-WAREHOUSE PORTFOLIO ON IPSX

13 March 2023

 

M7 Box+ REIT plc ("Box+ REIT" or the "Company"), a newly established,
externally managed closed-ended investment company announces that it intends
to apply for the Company's shares to be admitted to trading on the Wholesale
segment of IPSX by way of an introduction (the "Admission"). Upon Admission,
the Company proposes to acquire a portfolio of seven let and operational
e-warehouses (the "Property Portfolio") from M7 Box+ II LP ("M7 Box+ II" or
the "Fund"). As at 31 December 2022, the Property Portfolio was valued at
£228.9 million.

 

The proposed Admission aims to allow Fund investors to benefit from
transferring and onshoring their investment from a closed ended, Jersey
domiciled private investment vehicle to an investment in a U.K. vehicle which
has the potential to offer liquidity via a public listing on a regulated stock
exchange and benefits from the advantages of the U.K. government's REIT
regime. Due to the nature of the transaction, there will be no fundraising
exercise upon Admission.

 

The Company's objective is to provide Shareholders with a sustainable level of
income together with the potential for income and capital growth. Box+ REIT
aims to achieve this by investing in a geographically diversified portfolio of
enhanced warehouse (e-warehouse) properties across the UK.

M7 Real Estate Financial Services Ltd (the "AIFM"), will serve as alternative
investment fund manager to the Company and M7 Real Estate Ltd ("M7" or the
"Asset Manager" and together with its subsidiaries, the "M7 Group") will act
as asset manager to the Company in respect of the Property Portfolio. M7 will
directly own c.4.69% of the Company's share capital after Admission.

Dickson Minto W.S. ("Dickson Minto") is acting as IPSX Lead Adviser.

 

The Company will apply to become a real estate investment trust to which Part
12 of the UK Corporation Tax Act 2010 applies (a "REIT") and in summary means
that the Company will not pay U.K. corporation tax on income and capital gains
from its property rental business in the U.K. and elsewhere provided that
certain conditions are satisfied.

 

Value-add e-warehouse focused investment strategy supported by strong
structural drivers.

The Company will invest in the existing portfolio of value-add e-warehouse
assets across the U.K.  The Company aims to take advantage of the anticipated
continued occupier demand for last mile logistics and warehouse space, which
is driven by structural changes to consumer behaviour and an increased focus
from businesses on their supply chain, as well as the resultant strong
investor demand for assets in the sector.

This strategy takes advantage of the pricing arbitrage between industrial and
e-warehousing assets. The historic lack of distinction between generic retail
assets and retail warehouses has led to mispricing for these fundamentally
good assets, while the industrial asset class in recent years has witnessed
significant yield compression and historically high capital values.

An e-warehouse is defined, by M7, as a warehouse with enhanced planning uses
which means there is the flexibility to change the use of the warehouse in the
future. They are typically large regular shaped industrial units with retail
frontages that could easily be converted to pure industrial use and are
typically located with good accessibility and sufficient car parking that
could be used for yard space in the event of conversion. It is these types of
characteristics which in M7's opinion underpin the value of the asset.

The accessibility of edge of town or out of town retail parks compared to town
centre or covered schemes meant that footfall has also recovered more quickly
post the pandemic. Retail park footfall returned to almost pre-pandemic levels
in April 2021 and that level has been maintained since; while high street and
shopping centre footfall levels remain further below their pre-pandemic
levels.

Portfolio provides diverse and secure income with a strong track record of
rent collection

The Property Portfolio comprises seven e-warehouse properties located across
the U.K., assembled by the M7 Group. As at 31 December 2022, the 811,712 sq.
ft. portfolio was let to a diversified base of 40 occupiers with a contracted
rent of £16.2 million per annum, 67.7% of which is contracted to the
Property Portfolio's top ten tenants. These comprised B&Q Limited
(31.40%), DSG Retail Ltd (9.86%), Aldi Stores Ltd (5.57%), B&M Retail Ltd
(4.58%), Dunelm (3.70%), Matalan Retail Ltd, (3.05%), DFS Furniture Company
(2.89%), Carpetright plc (2.55%), Pets at Home Ltd (2.23%) and Fitness First
Clubs Ltd (1.88%).

The Property Portfolio has delivered robust rent collections prior to and
since the outbreak of the COVID-19 pandemic, and during the recent economic
downturn.

In Q4 2022, rent collections stood at 98.8%, the Property Portfolio was 100%
occupied and it had a weighted average unexpired lease term of 4.81 years. The
Investment Manager believes that the Property Portfolio will continue to
provide a strong, defensive and diversified income return whilst also offering
multiple value-add opportunities.

The Company will seek to create value through the active asset management of
the Property Portfolio, by renovating, extending, customising and/or
repurposing the properties as necessary to ensure they are fit-for-purpose to
seek to achieve the Company's investment objective.

Retail warehouse market remains robust

M7 is of the view that the outlook for the UK economy appears to be
stabilising, and possibly even improving, as the end of the first quarter of
2023 approaches. Despite the continued squeeze on consumer spending, the
occupational market in the retail warehouse sector remains robust for the time
being.

With the Office for National Statistics suggesting that online penetration
levels are stabilising at c. 26%, M7 believes that there will be an
ever-greater emphasis on the combining of online and physical retail. It is of
the view that there will be benefits from investing in physical retail to add
to the shopper experience to differentiate from shopping online which is
expected to, concurrently, lead to an increase in tenant diversity. Mixing
food, leisure and entertainment as well as having more integration with online
retail (including more showroom and click and collect models) is also expected
to improve attractiveness to both shoppers and occupiers.

M7 believes that retail parks are well positioned to take advantage of this
demand as they are typically in convenient and accessible locations making
them well suited to click and collect of online orders and returns, as well as
providing an opportunity to form part of the logistics network for retailer
delivery. This hybrid retail and last mile logistics potential has
increasingly become a factor for consideration from an investor perspective in
some locations.

M7 is a highly experienced Asset Manager with strong track record of value add
performance and is aligned to shareholders through a significant investment in
the Company.

As at 31 December 2022, the M7 Group managed circa 620 assets comprising 54.5
million sq. ft. and valued at approximately €6.9 billion on behalf of real
estate investors such as Blackstone and M&G.

Since its inception, the M7 Group has worked with Starwood Capital, Oaktree
Capital, Goldman Sachs, Blackstone, HIG Capital, Westbrook Partners, Europa
Capital and M&G Real Estate among others. The M7 Group currently operates
43 mandates in the form of joint ventures, managed funds and separate
accounts.

As at 31 December 2022, Oxford Properties Group has invested over €1.7
billion gross through M7 since acquiring the platform in September 2021,
helping to accelerate its ambitions to build a European logistics portfolio of
scale.

The AIFM is also the alternative investment fund manager of Mailbox REIT plc,
M7 Regional E-Warehouse REIT plc and BWP REIT plc which are admitted to
trading on IPSX Wholesale.

Strong independent non-executive Board

Robert Gilchrist has been appointed non-executive chairman of the Company. He
brings over 40 years of experience in the real estate industry with a deep
knowledge of creating and managing pan-European private equity real estate
funds. In 2004, Robert co-founded Rockspring Property Investment Managers and
was appointed Chief Executive in 2008. He grew the Company into one of the
UK's leading pan-European Real Estate Fund Managers, with approximately €8
billion under management before leading the sale of Rockspring to Patrizia
Immobilien in 2018. Prior to Rockspring, he held positions at several
prestigious firms including DTZ, MIM Property Services, and PRICOA Property
Investment Management Ltd.

 

The Board also comprises Kayte McLean and Tony Edgely. Kayte is a Finance
& Operations expert at MGT Investment Management and is also the
co-founder of GTO Partners LLP, where she served as the Chief Financial
Officer. Tony was a partner at Brockton Capital from 2010-2018 and prior to
that he was the Managing Director of Jones Lang LaSalle Corporate Finance Ltd.

Richard Croft, Executive Chairman of M7, added: "The proposed Admission of M7
Box+ REIT to IPSX Wholesale further emphasises the platform's ability to act
as a capital markets alternative for property owners, being the fourth company
to list on the exchange in two years.  In this case IPSX has allowed
investors in a Jersey based fund to on shore their investment into a new
vehicle that benefits from the UK Government's tax efficient REIT regime with
shares traded on a regulated and liquid exchange.

 

"M7 Box+ REIT, initially comprising seven let and operational assets which are
immediately income producing, will invest in a geographically diversified
portfolio of e-warehouse properties across the UK. We believe that the
historic lack of distinction between generic retail assets and retail
warehouses has led to mispricing for these properties which are supported by
strong market fundamentals. Despite Covid-19 and the current economic
headwinds, well-located e-warehouses have demonstrated a consistent level of
rental growth in recent years due to robust occupier demand, driven by
continued e-commerce penetration and an increased focus from businesses on
their supply chain. As such, we have identified an opportunity in this
subsector, which offers substantial scalability potential in the UK,
supporting our aim to provide shareholders with a sustainable level of income
together with the potential for income and capital growth."

 

 

Expected Timetable

The Company expects Admission and commencement of dealings to commence in
April 2023.

 

 

 

 

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

 M7 Real Estate Financial Services Limited (AIFM)   (via FTI Consulting below)
 Richard Croft, David Ebbrell

 Dickson Minto (IPSX Lead Adviser)                  T: 020 7649 6823 (http://www.m7mlreit.co.uk)
 Douglas Armstrong

 FTI Consulting (PR Adviser)                        Tel: 020 3727 1000
 Richard Sunderland, Eve Kirmatzis, Oliver Parsons  E: M7@FTIConsulting.com

Further information on the Company can be found on its website
www.boxpreit.com.

 

NOTES TO EDITORS

 

ABOUT IPSX

IPSX is a new FCA Regulated Investment Exchange and the world's first such exchange dedicated to single asset real estate companies and those owning multiple assets with commonality. IPSX Wholesale is reserved for institutional and qualified professional investors, while the IPSX Prime segment of the market is open to all investors and aims to give retail investors the ability to acquire tradable shares in institutional quality real estate assets.
 

1.        KEY MEMBERS

Richard Croft - Executive Chairman

Richard Croft is Executive Chairman of M7. He is responsible for the strategic
direction of the M7, capital raising and leads the real estate fund management
function. In this capacity he sits on the GP board and investment committees
of all M7's funds in addition to numerous other M7 joint venture boards.

Prior to the start of M7 in April 2009, Richard founded Halverton REIM LLP
(subsequently GPT Halverton), a European real estate fund management business
which was sold to The GPT Group (an Australian listed property trust) in July
2007. At the time of the sale, the company employed circa 180 people across 10
European offices and managed over €2 billion of assets. Richard remained as
CEO of GPT Halverton until 2009.

Before his time at Halverton, Richard was International Investment Director of
The IO Group Ltd, Property Fund Management PLC (now Cromwell), and was
responsible for setting up its international infrastructure.

Richard has been involved in over €12 billion of transactions across the
U.K. and Europe during his 30 years of real estate experience.

In addition to his duties at M7, Richard is a Non-Executive Director of the
International Property Securities Exchange (IPSX), The Red Cat Pub Company,
The Pinnacle Group and a trustee of The Chicken Shed Theatre Group charity. He
is a regular speaker at conferences across Europe, U.S.A. and Asia covering
real estate and economics topics.

Richard is a member of The Worshipful Company of Chartered Surveyors.

David Ebbrell - Chief Executive Officer

David Ebbrell is the Chief Executive Officer for M7 Real Estate Ltd. David
sits on M7's investment committees.

Previously, David was the Chief Investment Officer for M7 overseeing M7's
acquisitions. David has a strong track record in strategy deal origination and
execution, including leading the acquisition programmes for M7's own funds and
its co-investing joint-ventures.

Since co-founding M7 in April 2009, he has been involved in transactions with
a value in excess of €17 billion of real estate assets across Europe.

Prior to M7, David was a Director at Halverton REIM LLP (subsequently GPT
Halverton), a European real estate fund management business where he focused
on European real estate transactions and prior to this worked at iOG (now
Cromwell Group) and Healey and Baker (now Cushman and Wakefield).

David has over 20 years of real estate experience and is a member of the Royal
Institution of Chartered Surveyors.

David Simmonds - Chief Financial Officer

David Simmonds is the Chief Financial Officer for M7, with overall
responsibility for M7's finance function.

David joined M7 in April 2016. He joined M7 from APN Property Group where he
was Finance Director of Australian Securities Exchange listed Industria REIT
since its inception and IPO in December 2013.

Prior to working in the Australian market, David held a series of senior
positions across multiple geographies and real estate asset types, working in
a number of European markets throughout his 30 year career.

This includes the role of Chief Financial Officer for Europe at APN's office
in London, where he was responsible for APN's European business activities
across 11 European jurisdictions.

David also spent over three years from 2007 to 2010 as Financial Director for
the Goodman Group, where he held responsibility for its European Business
Parks Division.

David is a Chartered Certified Accountant.

Jack Thoms

Jack Thoms is responsible for overseeing the investment management team in
London and the asset management teams in the U.K. and European offices, the
performance of the portfolios under management, client reporting and liaison
and oversight of the asset management strategies. Jack is also actively
involved in the set-up of new funds and initiatives alongside the New Business
and Transactions teams.

Jack co-founded M7 in 2009, prior to which he was a partner at GPT Halverton
where he was a fund director of the flagship fund, the Halverton Babock
Industrial Fund, which was a c.€900 million multi-let European industrial
vehicle. He was also a fund director for a distribution warehouse fund, EB8.
As fund director he was responsible for portfolio performance, client
reporting and asset management strategy. He managed a team of approximately 30
people across six countries.

Before this, Jack worked at Teesland iOG (now Valad) where he was divisional
director of U.K. investment with responsibility for asset management and
reporting for the UK portfolio. This included managed funds and third party
client mandates, and involved overseeing the administration of more than £400
million of assets.

Before his focus on U.K. asset management he was involved in the European
expansion of Valad, the establishment of its European funds and research and
the set-up of its French office.

Jack started his career at Lambert Smith Hampton in Glasgow as a graduate
surveyor before moving with Lambert Smith Hampton to London where he worked in
the valuation, rent review and professional team.

Jack has over 25 years of real estate experience.

Kirsty Apthorp - Senior Asset Manager

Kirsty develops and delivers the asset management strategies for the retail
warehouse funds across the UK.

Prior to joining the M7 Group in 2018, Kirsty had a varied career in property
and gained extensive property experience having worked for a variety of
organisations, including Standard Life; Liverpool Victoria; Canada Life, where
she was responsible for managing multi-sector funds across the UK; Broadgate
Estates, where she established the 3rd party mandate business and assets under
her management included Liverpool ONE, Central Saint Giles, Green Park and
Chiswick Park; Lloyds TSB where she undertook strategic asset management for
an occupational portfolio of properties; and, more recently, Moor Park Capital
Partners as Global Head of Property with responsibility for all European
managed assets.

Kirsty is a Chartered Surveyor, holds the Investment Management Certificate
(IMC) and has over 30 years of real estate experience.

 

 

Important information

This is a financial promotion and is not intended to be investment advice. The
content of this announcement (the "Announcement"), has been approved by M7
Real Estate Financial Services Ltd (the "AIFM") solely for the purposes of
section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended)
("FSMA").

This Announcement is not for release, publication or distribution, directly or
indirectly, in or into the United States (including its territories and
possessions, any state of the United States of America and the District of
Columbia, collectively, the "United States"), Australia, Canada, the Republic
of South Africa, Japan or any other jurisdiction where such distribution is
unlawful, or to US persons, as defined in Regulation S ("Regulation S") under
the US Securities Act of 1933, as amended. The distribution of this
Announcement may be restricted by law in certain jurisdictions and persons
into whose possession any document or other information referred to herein
comes should inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a violation of the
securities laws of any such jurisdiction.

This Announcement is not for publication or distribution, directly or
indirectly, in or into the United States. This Announcement is not an offer of
securities for sale into the United States. The securities of Company have not
been and will not be registered under the US Securities Act of 1933, as
amended, and may not be offered or sold in the United States, except pursuant
to an applicable exemption from registration. No public offering of securities
is being made in the United States.

This Announcement is for information purposes only and it does not constitute,
and may not be construed as, an offer to sell, or the solicitation of an offer
to acquire or subscribe for, securities of the Company in any jurisdiction
where such offer or solicitation is unlawful or would impose any unfulfilled
registration, qualification, publication or approval requirements on the
Company, M7, AIFM or Dickson Minto W.S. The offer and sale of securities of
the Company has not been and will not be registered under the applicable
securities laws of Australia, Canada, the Republic of South Africa or Japan.
Subject to certain exemptions, the securities of the Company may not be
offered to or sold within Australia, Canada, the Republic of South Africa or
Japan or to any national, resident or citizen of Australia, Canada, the
Republic of South Africa or Japan.

In addition, the Company has not been and will not be registered under the US
Investment Company Act of 1940, as amended, and the recipient of this
Announcement will not be entitled to the benefit of that act.

This Announcement is an advertisement and not a prospectus. Investors should
not subscribe for or purchase any transferable securities referred to in this
Announcement except on the basis of information in the Admission Document
intended to be published by Company in connection with its proposed
introduction and admission to trading on IPSX (the "Admission"). In
particular, prospective investors will be required to read and understand the
section entitled "Risk Factors" in the Admission Document, once available.
There will be no fundraising exercise upon Admission.

The information in this Announcement is for background purposes only and does
not purport to be full or complete. No reliance may be placed for any purpose
on the information contained in this Announcement or its accuracy or
completeness. This Announcement does not constitute or form part of any offer
or invitation to sell or issue, or any solicitation of any offer to purchase
or subscribe for any securities of the Company or any other securities nor
shall it (or any part of it) or the fact of its distribution, form the basis
of, or be relied on in connection with, any contract therefor.  The material
contained in this Announcement is given as at the date of its publication
(unless otherwise marked) and is subject to updating, revision and amendment.
The data in relation to the Property Portfolio is provided as at 31 December
2022 and is subject to change. Any proposals referred to herein are also
subject to revision and amendment. The Company, M7, AIFM and Dickson Minto
W.S. expressly disclaim any obligation or undertaking to update any such data
or proposals.

This Announcement does not constitute a recommendation concerning the
Admission. The price and value of securities and properties and any income
from them can go down as well as up. Past performance is not a guide to future
performance and prospective investors may not receive any return from the
Company. Before purchasing or receiving any securities of the Company, persons
viewing this Announcement should ensure that they fully understand and accept
the risks that will be set out in the Admission Document, if and when
published. Information in this Announcement or any of the documents relating
to the admission of the Company to IPSX cannot be relied upon as a guide to
future performance. Potential investors should consult a professional adviser
as to the suitability of the Company.

This Announcement may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or comparable
terminology. All statements other than statements of historical facts included
in this Announcement, including, without limitation, those regarding the
Company's financial position, strategy, plans, proposed acquisitions and
objectives, are forward-looking statements. Forward-looking statements are
subject to risks and uncertainties and, accordingly, the Company's actual
future financial results and operational performance may differ materially
from the results and performance expressed in, or implied by, the statements.
These factors include but are not limited to those described in the Admission
Document. These forward-looking statements speak only as at the date of this
Announcement and cannot be relied upon as a guide to future performance. The
Company, M7, AIFM and Dickson Minto W.S. expressly disclaim any obligation or
undertaking to update or revise any forward-looking statements contained
herein to reflect actual results or any change in the assumptions, conditions
or circumstances on which any such statements are based unless required to do
so by the Financial Services and Markets Act 2000, the Prospectus Regulation
Rules of the Financial Conduct Authority, the UK version of the EU Market
Abuse Regulation (2014/596) which is part of UK law by virtue of the European
Union (Withdrawal) Act 2018, as amended and supplemented from time to time
including by the Market Abuse (Amendment) (EU Exit) Regulations 2019 or other
applicable laws, regulations or rules.

Dickson Minto W.S, which is authorised and regulated by the Financial Conduct
Authority, is acting only for the Company in connection with the matters
described in this Announcement and is not acting for or advising any other
person, or treating any other person as its client, in relation thereto and
will not be responsible for providing the regulatory protection afforded to
clients of Dickson Minto W.S. or advice to any other person in relation to the
matters contained herein.

None of M7, the AIFM, Dickson Minto W.S., or the Company or any of their
respective parents or subsidiary  undertakings, or the subsidiary
undertakings of any such parent undertakings, or any of such person's
respective directors, officers, employees, agents, affiliates or advisers or
any other person ("their respective affiliates") accepts (save where required
by law) any responsibility or liability whatsoever for/or makes any
representation or warranty, express or implied, as to this Announcement,
including the truth, accuracy or completeness of the information in this
Announcement (or whether any information has been omitted from the
Announcement) or any other information relating to the Company, whether
written, oral or in a visual or electronic form, and howsoever transmitted or
made available or for any loss howsoever arising from any use of this
Announcement or its contents or otherwise arising in connection therewith.

No key information document has been prepared in respect of this communication
or the shares in the Company in accordance with Regulation (EU) No 1286/2014
on key information documents for packaged retail and insurance-based
investment products (PRIIPs) (and in the case of the United Kingdom, such
regulation as it forms part of the domestic law of the United Kingdom).
Accordingly, shares in the Company are not available to, and no person may
advise on, offer or sell such shares for or to, any retail client (as defined
in MifID 2) in the EEA or the United Kingdom.

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