abrdn Property Inc. abrdn Property Inc. Custodian Property Urban Logistics REIT - Update on recommended all-share merger

Custodian Property Income Reit

14/03/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240314:nRSN8369Ga&default-theme=true

RNS Number : 8369G  abrdn Property Income Trust Ltd  14 March 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

FOR IMMEDIATE RELEASE

 

14 March 2024

 

abrdn Property Income Trust Limited ("API")

 

Update on the recommended all-share merger with Custodian Property Income REIT
plc ("CREI")

 

Summary

 

Further to the announcement by the API Board on 22 February 2024, the API
Board provides an update regarding its assessment of the recommended all-share
merger with CREI (the "CREI Merger") and the possible all-share offer from
Urban Logistics REIT plc ("Urban Logistics") (the "ULR Possible Offer") in the
context of all of the strategic options available to API:

·      The API Board has assessed the options available to API in detail
with its professional advisers and, where appropriate, with input from API's
investment manager.

·      The API Board continues to believe that there is a compelling
strategic and financial rationale for the CREI Merger, taking account of the
Combined Group's prospects, notwithstanding the volatility in the CREI share
price during the offer period.

·      The API Board welcomes Urban Logistics' interest in API and has
reviewed the ULR Possible Offer and an indicative alternative structure
proposed by Urban Logistics, but has confirmed to Urban Logistics that it
would not recommend either proposal to API Shareholders, if a firm offer were
made on the terms proposed.

·      The API Board has also updated its assessment of a potential
managed wind-down ("Managed Wind-Down"), which now appears more viable than at
the time of the Board's original review in light of increased visibility on
property market conditions, but remains subject to risks relating to the
quantum, value and timing of proceeds and associated returns of capital.

·      Accordingly, and for the reasons outlined in this announcement,
the API Board continues to believe that the CREI Merger represents the best
outcome for API Shareholders, and reiterates its recommendation that API
Shareholders vote in favour of the CREI Merger.

·      Nevertheless, the API Board has decided that, while it continues
to view a Managed Wind-Down as a less attractive option for API Shareholders
than the CREI Merger, it intends to pursue such an option in the event that
the CREI Merger is not approved by the requisite majorities of API and CREI
Shareholders.

·      While the API Board is keen to conclude this period of
uncertainty for API Shareholders, the API Directors intend to adjourn the API
Court Meeting and the API General Meeting which are currently convened for 20
March 2024 by one week, to 27 March 2024, in order to provide sufficient time
for API Shareholders to assess the information contained in this and other
recent announcements, and in light of the recent extension to the deadline for
Urban Logistics to confirm its intentions.

James Clifton-Brown, Chair of API, said:

 

"The API Board has reviewed in detail the options available to API in the
interests of all shareholders, including the competing merger proposals from
CREI and Urban Logistics as well as a potential managed wind-down.

 

Having completed its comprehensive assessment, the API Board continues to
believe that the CREI Merger represents a strategically consistent and
significant enhancement to the status quo for API Shareholders. The CREI
Merger offers continued exposure to a diversified, income-focused strategy as
well as the growth prospects of the enlarged portfolio. Furthermore, the CREI
Merger represents a premium to API's undisturbed share price and brings an
increase in dividends, full dividend cover and enhanced scale and liquidity
for API shareholders.

 

Accordingly, the API Board unanimously reaffirms its recommendation that API
Shareholders vote in favour of the CREI Merger at the shareholder meetings
which will now be held on 27 March."

 

Background

 

On 19 January 2024, the boards of API and CREI announced that they had reached
agreement on the terms and conditions of a recommended all-share merger
pursuant to which CREI would acquire the entire issued and to be issued
ordinary share capital of API. The scheme document containing, among other
things, the full terms and conditions of the CREI Merger, the notices of the
API Court Meeting and the API General Meeting was posted to API Shareholders
on 1 February 2024 (the "Scheme Document").

 

On 20 February 2024, the API Board confirmed that it had received an
indicative proposal from Urban Logistics regarding a possible all-share offer
for API on the terms set out in an announcement published by Urban Logistics
on the same date. On 22 February 2024, the API Board announced an adjournment
of the API Court Meeting and the API General Meeting from 28 February 2024 to
20 March 2024. The Panel subsequently announced that Urban Logistics must by
5.00pm on 13 March 2024 either announce a firm intention to make an offer for
API under Rule 2.7 of the Code or announce that it does not intend to make an
offer for API.

 

On 4 March 2024, CREI reaffirmed its convictions that the CREI Merger was the
optimal outcome for shareholders in both API and CREI. On 13 March 2024, CREI
announced an update on the CREI Merger including an improvement in management
arrangements and fees for the Combined Group. As a result of this update, the
Panel announced an extension to the deadline by which Urban Logistics must
make clear its intentions in relation to API to 5.00pm on 15 March 2024.

 

Review Process

 

As set out in the announcement under Rule 2.7 of the Code (the "Announcement")
published in connection with the CREI Merger, the API Board elected to
undertake a comprehensive review of API's strategic options in Q3 2023, in
light of the challenges faced by the listed real estate sector as a whole and
API specifically. The review encompassed a wide range of options including
enhancements to the status quo, potential mergers, a sale of the company for
cash and a potential managed wind-down, with the objective of delivering an
uplift in value for API Shareholders as well as (in the context of either a
merger or API remaining a standalone company) increased scale, share
liquidity, an enhanced and fully covered dividend and an improved debt
profile. The review also considered ongoing feedback from API Shareholders.

 

The review resulted in the announcement of the CREI Merger on 19 January 2024
and the commencement of an offer period, during which any bona fide potential
offerors for API (such as Urban Logistics) became entitled under Rule 21.3 of
the Code to receive equivalent due diligence information, thereby ensuring a
level playing field for any potential competing offerors for the benefit of
API Shareholders.

 

As announced by the API Board on 22 February 2024, the purpose of adjourning
the API Court Meeting and the API General Meeting was to allow time for the
API Board to assess the ULR Possible Offer in the context of the CREI Merger
and the other options available to API, which included a Managed Wind-Down, as
well for Urban Logistics to complete its due diligence and make a binding
offer.

 

The API Board has now completed its assessment of the options available to
API, considering potential shareholder returns in the context of
deliverability and the associated risks, rewards and uncertainties. The API
Board has also taken into account increased visibility on potential
improvements in property market conditions from future reductions in interest
rates, among other factors. In addition, the Board is mindful of movements in
the share prices of each of CREI since 19 January 2024 and Urban Logistics
since 20 February 2024 and the prospects of each company. The API Board has
set out its conclusions below.

 

CREI Merger

 

The views of the API Board on the CREI Merger were set out in the sections
entitled "Background to, and reasons for, the Merger" and "Background to, and
reasons for, the API Directors' recommendation" in the Scheme Document. The
API Board stated that it was firmly of the view that a combination with CREI
represented an attractive opportunity for API Shareholders to benefit from a
premium to the prevailing API Share price, enhanced share liquidity and an
increase in dividend income on an expected fully covered basis through
continued participation in a diversified yet differentiated REIT of greater
scale.

 

The API Board recognises the volatility in CREI's share price since the
Announcement, as a consequence of (among other things) the differential in the
undisturbed share price ratings between CREI and API, the arbitrage between
the look-through offer price and API's own share price, and more recently the
uncertainty arising from the ULR Possible Offer and the API Board's review of
the competing offers and other strategic options.

 

Based on the Exchange Ratio of 0.78 new CREI Shares for each API Share, the
CREI Merger currently represents an implied offer price per API Share of:

·      60.5 pence based on the Closing Price per CREI Share on 13 March
2024 (being the Last Business Day prior to the date of this announcement) of
77.5 pence, which represents a 25.9% premium to the undisturbed API Share
price of 48.0 pence on 18 January 2024; and

·      57.2 pence based on the volume weighted average price per CREI
Share between 21 February 2024 (following the announcement of the ULR Possible
Offer) and 13 March 2024 of 73.3 pence, which represents a 19.1% premium to
the undisturbed API Share price on 18 January 2024.

The Exchange Ratio was negotiated extensively between API and CREI in light of
the cumulative and relative risks, rewards and financial effects of the CREI
Merger for each company's shareholders. The calculation of the ratio was
linked to the Rolled Forward Unaudited EPRA Net Tangible Asset value ("NTA")
of each of CREI and API as at 31 December 2023 subject to reciprocal
adjustments (as set out in the "Sources and Bases of Information" section of
this announcement) which primarily related to a conventional adjustment for
the fair value of debt and derivatives, reflecting the lower cost of CREI's
debt and its longer duration relative to API's.

 

Among the financial benefits of the CREI Merger for API Shareholders is the
7.3% annualised uplift in dividends for API Shareholders, which are expected
to be fully covered by earnings. The API Board also expects the Combined Group
to deliver continued earnings and dividend growth.

 

Finally, the API Board also notes the announcements made by CREI on 4 March
2024, in which CREI reaffirmed its conviction in the CREI Merger in detail,
and on 13 March 2024, in which it announced that it had agreed with Custodian
Capital further amendments to the existing investment management agreement
between CREI and its investment manager, Custodian Capital (the "Amended and
Restated Investment Management Agreement") for the benefit of all shareholders
in the Combined Group, including the removal of the previously agreed two-year
extension to the term of Custodian Capital's appointment and the waiver of
Custodian Capital's one-off project fee.

 

The API Board continues to believe that there is a compelling strategic and
financial rationale for the CREI Merger, taking account of the Combined
Group's prospects.

ULR Possible Offer

 

Urban Logistics announced the terms of a possible all-share offer for API on
20 February 2024, following its initial due diligence pursuant to Rule 21.3 of
the Code. Since 20 February 2024, the API Board and Urban Logistics have
engaged in further discussions regarding the terms of the ULR Possible Offer
and API and Urban Logistics have conducted reciprocal due diligence.

 

The API Board welcomes the interest in API from Urban Logistics and
acknowledges the time and effort that Urban Logistics has put into its
proposals and in undertaking due diligence. The API Board has considered Urban
Logistics' proposals and has studied its business in detail with its advisers.

 

Based on Urban Logistics' proposed exchange ratio of 0.469 new Urban Logistics
shares for each API share, and adjusting the Urban Logistics share prices
downward for the 2.45 pence special dividend payable to Urban Logistics
shareholders only, the ULR Possible Offer currently represents an implied
offer price per API Share of:

·      53.6 pence based on the Closing Price per Urban Logistics share
on 13 March 2024 (being the Last Business Day prior to the date of this
announcement) of 116.8 pence, which represents an 11.7% premium to the
undisturbed API Share price of 48.0 pence on 18 January 2024; and

·      54.1 pence based on the volume weighted average price per Urban
Logistics share between 21 February 2024 (following the announcement of the
ULR Possible Offer) and 13 March 2024 of 117.9 pence, which represents a 12.8%
premium to the undisturbed API Share price on 18 January 2024.

On 7 March 2024, Urban Logistics privately reiterated its proposal to the API
Board on the same terms as originally announced. In parallel, Urban Logistics
made a further indicative, conceptual proposal (the "ULR Alternative
Proposal") involving a break-up of API, pursuant to which API's industrial and
retail warehouses portfolios ("Portfolio 1") would be acquired by Urban
Logistics on a share-for-share basis based on the original exchange ratio
multiplied by the pro rata share of API's portfolio represented by Portfolio
1, and the remaining properties ("Portfolio 2") would remain within API, with
the intention that API should dispose of the properties and return capital to
API Shareholders. API's other assets and liabilities would be apportioned
between the two portfolios.

 

The API Board recognises the potential merits for API Shareholders of a
share-based transaction with Urban Logistics: the ULR Possible Offer currently
represents a premium to the undisturbed API Share price; Urban Logistics is a
constituent of the FTSE 250 and enjoys greater scale and share liquidity than
API; Urban Logistics and its investment adviser have a strong track record as
a specialist REIT in the logistics sector, which the API Board believes has
attractive prospects; and the API Board recognises the potential for income
growth and value appreciation in the context of a potential merger with Urban
Logistics.

 

In assessing Urban Logistics' interest, however, the Board has also taken
account of a number of drawbacks. The ULR Possible Offer would result in a
reduction in earnings and dividends for API Shareholders (compared to both API
standalone and especially the CREI Merger), with dividends also being less
regular and with lower earnings cover compared to the CREI Merger. While the
potential earnings and dividend impact stems primarily from the lower rental
yield of Urban Logistics' portfolio, it also reflects a degree of refinancing
risk. Furthermore, the ULR Possible Offer currently represents a discount to
implied value of the CREI Merger. More generally, the API Board believes that
a share-based transaction with Urban Logistics would constitute a deviation
for API Shareholders away from the diversified, income-focused strategy in
which they have chosen to invest, to a specialised, more total return-oriented
strategy.

 

The API Board recognises that the ULR Alternative Proposal represents a means
of potentially returning cash directly to API Shareholders. However, the API
Board is concerned that the ULR Alternative Proposal involves Urban Logistics
bilaterally acquiring for shares the most sought-after and liquid of API's
assets at an exchange ratio originally based on a merger of the entire
portfolios of API and Urban Logistics. As a consequence, the API Board
believes that API Shareholders would lose out on value in respect of Portfolio
1 while remaining fully exposed to the more significant risks associated with
Portfolio 2 as a smaller and less liquid company. The ULR Alternative Proposal
would also be subject to greater execution risk and complexity, thereby
prolonging the period of uncertainty for API Shareholders.

 

In light of these considerations, the API Board has rejected both of Urban
Logistics' proposals and would not recommend either proposal to API
Shareholders, if a firm offer were made to API Shareholders on those terms on
or prior to the deadline set by the Panel.

 

Managed Wind-Down

 

Since the API Board's original review of strategic options, conditions in the
underlying property market have improved moderately, reflecting a relatively
resilient economic performance (despite macroeconomic and geopolitical
uncertainties) and the prospect of interest rates being reduced. In light of
this, and the competing merger proposals from CREI and Urban Logistics, the
API Board has revisited in detail its assessment of a Managed Wind-Down of the
API portfolio as an alternative to a merger, with the benefit of continued
input from API's investment manager as well as the API Board's financial, tax,
legal and property advisers.

 

With continued improvement in underlying property markets, and given the
discount to NTA at which API has traded, the API Board believes that API would
be able to dispose of assets in the direct property market at materially
higher values than those implied by API's undisturbed and current share
prices, with the assets in sought-after sectors such as industrials and
logistics being the most liquid. However, the API Board is also mindful of the
impact on pricing of bringing large volumes of assets to market as part of a
public wind-down strategy; the sectoral breakdown of the API portfolio,
particularly its office exposure; and the time taken to execute disposals,
noting the size and relative granularity of the API portfolio, and taking into
account the time value of money.

The API Board has reviewed a range of detailed disposal scenarios over an
illustrative aggregate disposal period for the whole portfolio of 18-30
months, with capital being returned to API Shareholders from Q3 2024. The API
Board has also considered the impact of: direct disposal costs (estimated to
be 1.25-1.5% of proceeds); management fees (subject to any changes to maximise
alignment with API Shareholders in this context); certain fixed ongoing
corporate costs (which would gradually increase as a proportion of NTA); the
gradual pay down of the existing debt facility maturing in April 2026; and
costs associated with the review and implementation of strategic options as
well as the means of returning capital to API Shareholders in future.

During the Managed Wind-Down, API Shareholders would continue to receive
dividend income, but this income would diminish over time and would be
materially lower than that received in the context of a merger, especially
with CREI, which the API Board has factored into its comparative assessment.
The API Board would anticipate API returning capital proceeds to API
Shareholders through a combination of on-market share buybacks and periodic
returns of capital through other means (such as tender offers or compulsory
partial redemptions). The API Board recognises, however, that the accrual of
proceeds prior to distribution may dilute shareholder returns. The API Board
has also taken account of the anticipated gradual reduction in the size of API
and hence the diminishing liquidity of its shares over the implementation
period, potentially impacting their valuation and the ability of API
Shareholders who wish to do so to realise their investment prior to the
completion of the Managed Wind-Down.

One of the benefits of a Managed Wind-Down, in the API Board's view, would be
the ability of API Shareholders to reinvest in larger and more liquid REITs of
their choice, if they wished to retain exposure to the sector. However, in the
expectation that disposals will partly be facilitated by further improvements
in market conditions, the API Board is mindful of the likelihood of upward
re-rating in the listed sector generally, which would narrow the spread
between the value of proceeds received by API Shareholders from the Managed
Wind-Down and the value of potential redeployment opportunities within the
listed sector.

In summary, the API Board believes that a Managed Wind-Down presents a viable
strategic option for API. However, the API Board is aware that many API
Shareholders are seeking continued exposure to UK commercial property in a
diversified format that generates an attractive ongoing dividend yield. The
API Board also notes that implementation of a Managed Wind-Down would carry
risks relating to the quantum, value and timing of proceeds and returns of
capital, and hence API Shareholders' options for reinvestment.

Conclusion

 

The API Board has reviewed each of the strategic options available to it in
detail together with its professional advisers and, where appropriate, API's
investment manager. It has also compared these options with the possibility of
API continuing as a standalone company. The API Board welcomes the feedback it
has received from shareholders, the reaffirmation of CREI's conviction in the
CREI Merger and the proposals from Urban Logistics.

For each of the options, the API Board has considered the potential returns
for API Shareholders. The API Board has considered the dividend income and
potential capital value or proceeds over a range of time periods, taking into
account the time value of money. In each case, these quantitative
considerations have been supplemented by an assessment of the deliverability,
risks, rewards and uncertainties.

Following its review, and for the reasons outlined in this announcement, the
API Board continues to believe that the CREI Merger represents the best
outcome for API Shareholders, and reiterates its unanimous recommendation that
API Shareholders vote in favour of the CREI Merger.

The API Board believes that the CREI Merger is a strategically consistent but
significant enhancement of the status quo for API Shareholders. The CREI
Merger offers continued exposure to a diversified, income-focused strategy.
Furthermore, the CREI Merger represents a premium to the undisturbed share
price and brings an increase in dividends, full dividend cover and enhanced
scale and liquidity. In addition, the API Board notes that in exchanging their
API Shares for new CREI Shares, API Shareholders stand to benefit from
continued exposure to the enlarged portfolio and its growth prospects, as
opposed to crystallising their position through an exit in cash.

The API Board also wishes to clarify that while it continues to view a Managed
Wind-Down as a less attractive option for API Shareholders than the CREI
Merger, it intends to pursue this option in the event that the CREI Merger is
not approved by the requisite majorities of API and CREI Shareholders,
recognising the challenges that API would continue to face as a standalone
company. More information on this process would be set out at the appropriate
time and following the conclusion of the current offer period, building upon
the work already undertaken by the API Board, API's investment manager and
API's advisers.

 

Recommendation

 

The API Directors, who have been so advised by Lazard & Co., Limited as to
the financial terms of the CREI Merger, consider the terms of the CREI Merger
to be fair and reasonable. In providing its advice to the API Directors,
Lazard has taken into account the commercial assessments of the API Directors.
Lazard is providing independent financial advice to the API

Directors for the purposes of Rule 3 of the Takeover Code.

 

Accordingly, the API Directors recommend unanimously that Scheme Shareholders
vote in favour of the Scheme at the API Court Meeting and that API
Shareholders vote in favour of the API Resolution to be proposed at the API
General Meeting as the API Directors have irrevocably undertaken to do in
respect of their own beneficial holdings of, in aggregate, 295,092 API Shares
(representing approximately 0.08 per cent. of the API's total issued ordinary
share capital as at the close of business on the Latest Practicable Date), as
more fully described in paragraph 7.1 of Part X of the Scheme Document.

 

Adjournment of API Court Meeting and API General Meeting

 

Notices of the API Court Meeting and the API General Meeting are contained in
Part XII and Part XIII respectively of the Scheme Document.

 

The API Board intends to adjourn the API Court Meeting and the API General
Meeting so as to be reconvened and held on 27 March 2024 at 10.00 a.m. and
10.15 a.m. (or as soon thereafter as the API Court Meeting concludes or is
further adjourned), respectively, at the offices of Addleshaw Goddard LLP,
Milton Gate, 60 Chiswell Street, London EC1Y 4AG. Forms of Proxy in respect of
the API Court Meeting and the API General Meeting should therefore now be
returned so as to be received as soon as possible and in any event not later
than:

·      10:00 a.m. on 25 March 2024 in respect of the API Court Meeting;
and

·      10:15 a.m. on 25 March 2024 in respect of the API General
Meeting.

Accordingly, the API Directors recommend that API Shareholders do not attend
the API Court Meeting and the API General Meeting on 20 March 2024.

API Shareholders who have already submitted Forms of Proxy for the API Court
Meeting and the API General Meeting and do not wish to change their voting
instructions, do not need to take any further action as their Forms of Proxy
will continue to be valid in respect of the API Court Meeting and the API
General Meeting.

 

API Shareholders who have submitted Forms of Proxy for the API Court Meeting
and / or the API General Meeting and who now wish to change their voting
instructions, should contact API's registrar, Computershare, on +44 (0)370 707
4040. Calls are charged at the standard geographical rate and will vary by
provider. Calls from outside of the United Kingdom will be charged at the
applicable international rate. Lines will be open between 8.30 a.m. to 5:30
p.m., Monday to Friday excluding public holidays in England and Wales.
Computershare cannot provide any financial, legal or tax advice and calls may
be monitored for security and training purposes.

 

API Shareholders are also reminded that completion and return of a Form of
Proxy, or the appointment of a proxy electronically using CREST, will not
prevent them from voting at the API Court Meeting or the API General Meeting
in person. Please refer to the Scheme Document for further information.

 

Conditions 2(a)(ii) and 2(b)(ii) to the CREI Merger set out in the Scheme
Document state that the CREI Merger is conditional on the API Court Meeting
and the API General Meeting being held on or before the 22nd day after the
expected date of the API Court Meeting and API General Meeting set out in the
Scheme Document (or such later date (if any) as may be agreed between CREI and
API with the consent of the Panel and (if required) that the Court may allow
(the "API Meeting Long Stop Date Conditions"). CREI has agreed with API, and
received consent from the Panel, to a later long stop date for the API Court
Meeting and the API General Meeting to be held, for the purposes of the API
Meeting Long Stop Date Conditions in the Scheme Document, such date being the
22nd day after the reconvened dates for the API Court Meeting and API General
Meeting referred to above.

 

Timetable Update

 

An updated expected timetable for the CREI Merger is set out below.

 

 Event                                                                     Time and/or date (2024)
 Latest time for lodging Forms of Proxy for the:
 API Court Meeting (BLUE form)                                             10.00 a.m. on 25 March((1))
 API General Meeting (WHITE form)                                          10.15 a.m. on 25 March((2))
 Voting Record Time for the API Court Meeting and the API General Meeting  6.00 p.m. on 25 March((3))
 API Court Meeting                                                         10.00 a.m. on 27 March
 API General Meeting                                                       10.15 a.m. on 27 March((4))

_______________________

(1)     It is requested that BLUE Forms of Proxy for the API Court Meeting
be lodged no later than 48 hours before the time and date set for the API
Court Meeting. A copy of a completed and signed BLUE Form of Proxy not so
lodged may be handed to the Chair of the API Court Meeting at any time before
the time that the API Court Meeting is due to commence and will still be
valid.

(2)     WHITE Forms of Proxy for the API General Meeting must be lodged no
later than 48 hours before the time and date set for the API General Meeting.
WHITE Forms of Proxy for the API General Meeting not lodged by this time will
be invalid.

(3)     If either the API Court Meeting or the API General Meeting is
adjourned, the Voting Record Time for the relevant adjourned Meeting will be
6.00 p.m. on the date falling two days before the date of the adjourned
Meeting.

(4)     To commence at 10.15 a.m. or as soon thereafter as the API Court
Meeting shall have concluded or been adjourned.

General

 

Capitalised terms in this announcement, unless otherwise defined, have the
same meaning as set out in the Scheme Document, a copy of which is available
on API's website at www.abrdnpit.co.uk (http://www.abrdnpit.co.uk) . All
references to times in this announcement are to London time unless otherwise
stated.

 

This announcement has been made without the consent of Urban Logistics.

 

Enquiries:

 abrdn Property Income Trust Limited

 James Clifton-Brown (Chair)                          via Winterflood or

                                                      H/Advisors Maitland
 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

 

Sources and Bases of Information

 

1.  All share price data is sourced from FactSet and Bloomberg data as at the
applicable date

2.  "Undisturbed" share prices for each of API and CREI are as at 18 January
2024, and for Urban Logistics as at 20 February 2024

3.  "Current" share prices for each of API, CREI and Urban Logistics are as
at 13 March 2024

4.  Unless otherwise stated, all other financial information relating to the
CREI Merger is as set out in the Announcement and Scheme Document

5.  The breakdown of the aggregate net adjustment of 6.8% of NTA in arriving
at the fixed Exchange Ratio for the CREI Merger is as follows:

i.  post balance sheet asset disposals, representing 0.3% of the aggregate
net adjustment;

ii.  the fair value of each company's debt and derivatives, representing 3.6%
of the aggregate net adjustment;

iii. the relative levels of dividend cover between the two companies,
representing 1.5% of the aggregate net adjustment, reflecting the fact that
CREI pays a fully covered dividend and API an uncovered dividend; and

iv. the costs expected to be incurred by each party in connection with the
CREI Merger, representing 1.4% of the aggregate net adjustment, reflecting the
higher burden of costs (including IMA termination and the waiver of debt
change-of-control provisions) as a percentage of NTA relative to CREI for API
as the smaller company.

Important notices

 

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or solicitation of any offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of any securities, or the
solicitation of any vote or approval in any jurisdiction, pursuant to this
announcement or otherwise. There can be no certainty that an offer will be
made by Urban Logistics.

 

The release, publication or distribution of this announcement in jurisdictions
outside the United Kingdom may be restricted by law and therefore persons into
whose possession this announcement comes should inform themselves about, and
observe such restrictions. Any failure to comply with such restrictions may
constitute a violation of the securities law of any such jurisdiction.

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 set
out 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 set out 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 announcement 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 announcement.
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 announcement, any statement
contained herein or otherwise.

Publication on a website

In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement
will be made available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, on and API's website at
www.abrdnpit.co.uk (http://www.abrdnpit.co.uk) by no later than 12 noon
(London time) on the first business day following the date of this
announcement.

For the avoidance of doubt, neither the contents of these websites nor the
contents of any websites accessible from any hyperlinks is incorporated into
or forms part of this announcement.

 

Disclosure requirements of the Code

 

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or
more of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified.

 

An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities
of each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 p.m. (London time) on the 10(th)
business day following the commencement of the offer period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10(th) business
day following the announcement in which any securities exchange offeror is
first identified. Relevant persons who deal in the relevant securities of the
offeree company or of a securities exchange offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1
per cent. or more of any class of relevant securities of the offeree company
or of any securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of any
securities exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the extent that
these details have previously been disclosed under Rule 8 of the Code. A
Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be
made by no later than 3.30 p.m. (London time) on the business day following
the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3 of the Code.

 

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4 of the Code).

 

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  OUPZZGMFZDVGDZG