REG - M7 Regional E-Whse. - Proposal to De-list from IPSX

FTI ConsultingAnnouncement

27/10/2023 08:15

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RNS Number : 4722R  M7 Regional E-Warehouse REIT PLC  27 October 2023

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INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

For immediate release.

 

27 October 2023

 

M7 REGIONAL E-WAREHOUSE REIT PLC

(the "Company")

 

Proposal to De-list from IPSX

 

M7 Regional E-Warehouse REIT Plc (the "Company") announces its intention to
de-list its ordinary shares from the Wholesale Market of the International
Properties Securities Exchange ("IPSX" or the "Exchange").

This decision follows the Company's announcement of 4 September 2023 regarding
a letter received from IPSX stating that the Exchange's board of directors
will wind down the operations of IPSX and, as a result, terminate the
Admission Agreement between the Company and IPSX. The Exchange also informed
the Company that the final day of trading of the IPSX will be 1 December
2023.

The Company's board of directors (the "Board") therefore considered this news
alongside a number of other factors including the deterioration in the
economic environment since December 2021, when the Company's shares were first
admitted to IPSX ("Admission"), the ongoing regulatory compliance burden, the
administrative costs incurred by the Company as a listed vehicle and the low
level of liquidity in the Company's ordinary shares.

As a result, the Board has concluded that it is in the best interests of the
Company and its shareholders to de-list the Company from IPSX and not seek a
listing on an alternative platform but to restructure the Company and its
subsidiaries into a private fund.  In conjunction with the de-listing and
restructuring, the Company also intends to leave the REIT regime on its
de-listing from IPSX.  The Board has consulted with tax advisers and does not
believe that the loss of REIT status should result in any material additional
tax liability.

By way of background, since Admission, market conditions have changed
substantially.  This has impacted the Company in a number of ways including
reducing the fair value of the Company's investment property portfolio,
putting pressure on the loan to value ratio and increasing interest expense.

§ Between Admission and the Company successfully completing the refinancing
of its senior debt on 26 September 2023 (the "Refinancing"), the SONIA rate
has increased by more than 500 basis points. While the Company's senior debt
was hedged using an interest rate cap, this has since matured resulting in
substantial additional interest payments having to be made by the Company.

§ The fair value of the Company's investment property portfolio reduced from
£110.7 million at Admission to £101.8 million at 30 September 2023.

§ Under the terms of the new facility agreement that was entered into as part
of the Refinancing, the Company is required to reduce its loan to value ratio
over the next 18 months. To achieve this the Company needs to make quarterly
amortisation payments totalling approximately £1.8 million over this
period.

 

As a result of these increased cash pressures, it is expected that it will
become more difficult for the Company to meet certain REIT conditions, with
any such breach having as its likely consequence a tax penalty for the
Company. On this basis, it will become less advantageous for the Company to
remain within the REIT regime.

Against this background therefore, the Company will shortly send a circular to
its shareholders providing further details in relation to its de-listing
(including the timetable for such de-listing) and leave the REIT regime, as
well as the Board's proposals for the restructuring.

The Company continues to demonstrate operational resilience against a
challenging macro backdrop.  Occupancy at 30 September 2023 is 98.21% and
gross rental income is £8.84 million.  Rent collections remain strong at
94.79% for the year-to- date period ended 30 September 2023.  Whilst noting
that the investment property valuation has declined since Admission, this
decline is driven by an outward yield shift following a period of limited
market transactional evidence as investor sentiment continues to be affected
by the higher interest environment.  The valuation performance of the
portfolio is reflective of the wider retail warehouse market.

For further information, please visit www.rewreit.co.uk
(http://www.rewreit.co.uk) or contact:

 

 M7 Regional E-Warehouse REIT PLC
 James Max - Chairman                              via FTI Consulting below

 M7 Real Estate Ltd            +44 (0) 20 3657 5500

 Richard Croft

 Dickson Minto (Lead Advisor)                      +44 (0) 131 225 4455

 FTI Consulting (Communications Adviser)           +44 (0) 20 3727 1000
 Richard Sunderland / Eve Kirmatzis                M7regionale-warehousingreit@FTIConsulting.com

 Alter Domus (UK) Limited (Company Secretary)      +44 (0) 207 645 4800

 

The Company's ISIN is GB00BLN7H037.

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