REG - Tritax Big Box REIT UK Comm Prop REIT Ld - Recommended All-Share Combination
21/03/2024 07:45
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RNS Number : 7647H Tritax Big Box REIT plc 21 March 2024
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INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW BBOX SHARES EXCEPT ON THE BASIS OF THE
INFORMATION IN THE SCHEME DOCUMENT AND THE COMBINED CIRCULAR AND PROSPECTUS
WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION IS CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
FOR IMMEDIATE RELEASE.
21 March 2024
Recommended All-Share Combination
of
Tritax Big Box REIT plc ("BBOX") and UK Commercial Property REIT Limited
("UKCM")
to be effected by means of a Court-sanctioned scheme of arrangement under Part
VIII of the Companies Law of Guernsey
Summary and highlights
The Boards of BBOX and UKCM are pleased to announce that they have reached
agreement on the terms of a recommended all-share combination of BBOX and UKCM
pursuant to which BBOX will acquire the entire issued and to be issued
ordinary share capital of UKCM (the "Combination").
Under the terms of the Combination, each UKCM Shareholder will be entitled to
receive:
0.444 New BBOX Shares for each UKCM Share
(the "Exchange Ratio")
The Exchange Ratio is on an EPRA NTA for EPRA NTA basis with reference to
BBOX's 31 December 2023 EPRA NTA of 177.2 pence per share and UKCM's 31
December 2023 EPRA NTA of 78.7 pence per share.
Following completion of the Combination, UKCM Shareholders will own
approximately 23.3 per cent. and existing BBOX Shareholders will own
approximately 76.7 per cent. of the issued ordinary share capital of the
Combined Group.
Based on BBOX's Closing Price of 160.2 pence per BBOX Share on 9 February 2024
(being the day of the commencement of the Offer Period), the Combination
implies a value of 71.1 pence per UKCM Share and approximately £924 million
for the entire issued and to be issued ordinary share capital of UKCM, which
represents:
(i) a premium of 10.8 per cent. to the UKCM undisturbed Closing
Price of 64.2 pence per UKCM Share on 9 February 2024 (being the day of the
commencement of the Offer Period); and
(ii) a premium of 23.0 per cent. to the volume weighted average
price of 57.8 pence per UKCM Share for the six-month period ended 9 February
2024 (being the day of the commencement of the Offer Period).
Strategic and Financial Rationale
The Boards of BBOX and UKCM believe that the Combination has a compelling
strategic and financial rationale, building on BBOX's existing strategy and
proven track record of delivering attractive and sustainable returns for
shareholders, further details of which are set out below:
(a) High-quality, complementary logistics-focused portfolios,
offering significant and near-term rental growth potential with 39 per cent.
rental reversion within UKCM's £740 million logistics portfolio and 24 per
cent. rental reversion within UKCM's overall portfolio;
(b) Enhanced BBOX customer offering, via a broader range of
logistics property sizes, locations and tenant uses from "Mega-Boxes" to
smaller, strategically located, logistics assets within key urban locations;
(c) Value creation from capital recycling, with UKCM's £475 million
non-logistics assets offering attractive asset management and capital
recycling opportunities which provides the potential for accelerated
investment into BBOX's development pipeline, targeting the delivery of new,
"triple net" leased, best-in-class logistics assets at a 6 to 8 per cent.
yield on cost (noting that a 7.0 per cent. yield on cost is being targeted for
2024 development activity);
(d) Immediately identifiable costs savings, with the Combination
expected to generate immediately identifiable cost savings of c.£4.0 million
per annum, helping to drive earnings growth and dividend progression;
(e) Robust and conservatively leveraged balance sheet, with a
reduced loan-to-value ratio of 29 per cent. and net debt to EBITDA of 7.4x,
significant available liquidity and no near-term debt maturities; and
(f) Creation of the fourth largest UK REIT, with a combined EPRA
NTA of approximately £4.4 billion, benefitting from enhanced financial
flexibility, expected cost of capital benefits, and increased share liquidity
given its enlarged scale and index weightings.
Recommendations
Recommendation of UKCM Directors
The UKCM Recommending Directors, who have been so advised by Rothschild &
Co as to the financial terms of the Combination, consider the terms of the
Combination to be fair and reasonable. In providing its advice to the UKCM
Directors, Rothschild & Co has taken into consideration the commercial
assessments of the UKCM Directors. Rothschild & Co is providing
independent financial advice to the UKCM Directors for the purposes of Rule 3
of the Takeover Code.
Accordingly, taking into account the factors set out in paragraph 6 of this
Announcement, the UKCM Recommending Directors intend to recommend unanimously
that Scheme Shareholders vote in favour of the Scheme at the Court Meeting and
UKCM Shareholders vote in favour of the resolution(s) to be proposed to
shareholders at the UKCM General Meeting (or, if implemented by a Takeover
Offer, to accept such Takeover Offer) as the UKCM Recommending Directors have
irrevocably undertaken to do so in respect of their own beneficial holdings of
427,666 UKCM Shares representing, in aggregate, approximately 0.03 per cent.
of the issued ordinary share capital of UKCM on 20 March 2024 (being the last
Business Day prior to the release of this Announcement).
Recommendation of BBOX Directors
As a result of its size, the Combination constitutes a Class 1 transaction for
BBOX for the purposes of the Listing Rules. Accordingly BBOX will be required
to seek the approval of the BBOX Shareholders for the Combination at the BBOX
General Meeting. The Combination will also be conditional on the approval of
the BBOX Shareholders of the issuance of the New BBOX Shares at the BBOX
General Meeting. The BBOX Directors consider the Combination to be in the best
interests of BBOX and the BBOX Shareholders as a whole and intend unanimously
to recommend that BBOX Shareholders vote in favour of all of the resolutions
to be proposed at the BBOX General Meeting which will be convened in
connection with the Combination, as they have irrevocably undertaken to do, or
procure, in respect of their own beneficial holdings of 390,170 BBOX Shares
representing, in aggregate, approximately 0.02 per cent. of BBOX's issued
ordinary share capital in issue on 20 March 2024 (being the last Business Day
prior to the release of this Announcement).
The BBOX Directors have received financial advice from Jefferies and J.P.
Morgan Cazenove in relation to the Combination. In providing their advice to
the BBOX Directors, Jefferies and J.P. Morgan Cazenove have relied upon the
BBOX Directors' commercial assessment of the Combination.
Shareholder Support
In addition to the irrevocable undertakings received from the UKCM
Recommending Directors, BBOX has received an irrevocable undertaking from
Phoenix Life Limited ("Phoenix") to vote in favour of the Combination, if it
is implemented by way of the Scheme or, if implemented by way of a Takeover
Offer, to accept such Takeover Offer, in respect of 563,773,465 UKCM Shares,
representing approximately 43.4 per cent. of UKCM's total issued ordinary
share capital on 20 March 2024 (being the last Business Day prior to the
release of this Announcement).
Commenting on the Combination, Michael Eakins, Group Chief Investment Officer
of Phoenix said: "We look forward to becoming a shareholder of Tritax Big Box.
The allocation to Tritax Big Box forms a core part of our strategic asset
allocation for long term savings products within our With-Profits Funds".
BBOX has also received a non-binding letter of intent from Investec Wealth
& Investment Limited ("Investec") to vote in favour the Combination, if it
is implemented by way of the Scheme or, if implemented by way of a Takeover
Offer, to accept such Takeover Offer, in respect of 170,000,000 UKCM Shares
representing approximately 13.1 per cent. of UKCM's total issued ordinary
share capital on 20 March 2024 (being the last Business Day prior to the
release of this Announcement).
In total, therefore, BBOX has received from UKCM Shareholders (including the
UKCM Recommending Directors) irrevocable undertakings and a letter of intent
representing, in aggregate, approximately 56.5 per cent. of the issued
ordinary share capital of UKCM on 20 March 2024 (being the last Business Day
prior to the release of this Announcement).
Further details of the irrevocable undertakings and the letter of intent are
set out in Appendix 3 to this Announcement.
Dividends
BBOX and UKCM have agreed that both BBOX Shareholders and UKCM Shareholders
will be entitled to receive and retain certain permitted quarterly dividends
in the period to completion of the Combination, that are made in accordance
with their respective existing dividend policies, consistent with past
practice in relation to the payment of dividends, including as to time and
quantum, without any adjustment to the Exchange Ratio.
Further details are set out in paragraph 13 of this Announcement.
Transaction Structure and Timetable
It is intended that the Combination will be implemented by way of a
Court-sanctioned scheme of arrangement between UKCM and the Scheme
Shareholders under Part VIII of the Companies Law of Guernsey, further details
of which are contained in the full text of this Announcement and which will be
set out in full in the Scheme Document.
BBOX reserves the right, with the consent of the Panel and UKCM or, in certain
circumstances, without the consent of UKCM, to implement the Combination by
way of a Takeover Offer.
The Combination will be subject to the Conditions and certain further terms
set out in Appendix 1 to this Announcement and to the full terms and
conditions which will be set out in the Scheme Document, including the
approval of the Scheme by the Scheme Shareholders, the sanction of the Scheme
by the Court and the approval of BBOX Shareholders.
The Scheme Document will include full details of the Scheme, together with
notices of the Court Meeting and the UKCM General Meeting, details of the
expected timetable, and specify the actions to be taken by Scheme Shareholders
and UKCM. It is expected that the Scheme Document, together with the Forms of
Proxy, will be published as soon as practicable and in any event within 28
days of the date of this Announcement (or such later date as may be agreed by
BBOX and UKCM with the consent of the Panel and (if required) that the Court
may allow).
The Combination will be put to Scheme Shareholders at the Court Meeting and to
UKCM Shareholders at the UKCM General Meeting. In order to become Effective,
the Scheme must be approved by a majority in number representing 75 per cent.
or more in value of votes cast by the Scheme Shareholders (or the relevant
class thereof, if applicable) who are on the register of members of UKCM at
the Scheme Voting Time and who are present and vote, whether in person or by
proxy, at the Court Meeting. In addition, a special resolution to approve all
actions necessary for carrying the Scheme into effect and the adoption of
amended articles of incorporation of UKCM must be passed by UKCM Shareholders
representing at least 75 per cent. of the votes cast on that resolution at the
UKCM General Meeting.
Pursuant to the Listing Rules, BBOX is required to produce a circular in
connection with the Combination to be sent to BBOX Shareholders containing,
amongst other things, (i) the background to and reasons for the Combination
and (ii) a notice convening the BBOX General Meeting at which, amongst other
things, the BBOX Resolution will be proposed for the approval by BBOX
Shareholders. BBOX is also required to prepare a prospectus in connection with
the Admission of the New BBOX Shares. It is expected that the circular and
prospectus will be a combined circular and prospectus (the "Combined Circular
and Prospectus") and published and made available to BBOX Shareholders at or
around the same time as the Scheme Document is published and posted to UKCM
Shareholders.
The Scheme is expected to become effective in May 2024, subject to the
satisfaction or waiver of the Conditions and certain further terms set out in
Appendix 1 to this Announcement and the full terms and conditions which will
be set out in the Scheme Document.
Comments on the Combination
(a) Commenting on the Combination, Aubrey Adams, Chairman of BBOX
said:
"The Board of BBOX believes the Combination has compelling strategic and
financial rationale for both BBOX and UKCM Shareholders. UKCM has assembled a
high-quality logistics-oriented portfolio with a South-East and Midlands focus
and significant embedded rental reversion potential, all characteristics which
are complementary to BBOX's current portfolio. The Combination grows BBOX's
exposure to "last mile" and urban logistics assets which have the potential to
enhance returns of the existing portfolio. This Combination represents a
continuation of the highly successful strategy that BBOX has delivered since
IPO and which over recent years has included acquiring selected "last mile"
and urban logistics assets.
Shareholders in the Combined Group will benefit from immediately identifiable
cost savings creating increased scope to deliver higher earnings and
dividends, while capital recycling and asset management opportunities in the
UKCM portfolio represent significant further opportunities to enhance total
shareholder returns."
(b) Commenting on the Combination, Margaret Littlejohns, Senior
Independent Director of UKCM said:
"The UKCM Recommending Directors believe this transaction allows all UKCM
shareholders to benefit from continued investment in a REIT, but with
significantly larger scale and improved share liquidity, as well as addressing
the factors we believe have contributed to the persistent discount at which
UKCM's shares have traded for many years. The combined business will be
invested in a high-quality UK logistics portfolio, where BBOX has a strong
track record of delivering attractive, sustainable returns which will drive
improved earnings for UKCM shareholders and support a fully covered dividend.
By combining the businesses on an EPRA NTA-to-EPRA NTA basis, shareholders
will be able to share fully in the future potential valuation upside whether
that is delivered from asset management initiatives, rental growth, the
potential of the BBOX development pipeline or a broader improvement in real
estate sector sentiment. These factors together with the compelling strategic
and financial rationale of the transaction lead us to recommend this deal to
all shareholders."
This summary should be read in conjunction with, and is subject to, the full
text of this Announcement and its Appendices.
The Combination will be subject to the Conditions and further terms set out in
Appendix 1 to this Announcement and to the full terms and conditions which
will be set out in the Scheme Document. Appendix 2 contains the sources of
information and bases of calculation of certain information contained in this
summary and this Announcement. Appendix 3 contains a summary of the
irrevocable undertakings and letter of intent received in relation to the
Combination that are referred to in this Announcement. Appendix 4 contains
details of and bases of calculation of the anticipated quantified financial
benefits of the Combination together with the various associated reports
referred to below. Appendix 5 contains the property valuation reports for UKCM
and BBOX referred to below. Appendix 6 contains definitions of certain terms
used in this summary and this Announcement.
For the purposes of Rule 28 of the Takeover Code, the quantified financial
benefits statement contained in this Announcement is the responsibility of
BBOX and the BBOX Directors. Part A of Appendix 4 sets out the anticipated
quantified financial benefits statement relating to cost savings and synergies
arising out of the Combination and provides underlying information and bases
of belief. Parts B and C of Appendix 4 include reports from BBOX's reporting
accountant, BDO, and its lead financial adviser, Jefferies, in connection with
the anticipated quantified financial benefits statement, as required pursuant
to Rule 28.1(a) of the Takeover Code, and provides underlying information and
bases for the accountant's and financial adviser's respective reports. Each of
BDO and Jefferies has given and not withdrawn its consent to the inclusion of
its report in this Announcement in the form and context in which it is
included.
For the purposes of Rule 29.5 of the Takeover Code, the UKCM Board confirms
that CBRE has confirmed to it that an updated valuation of UKCM's property
portfolio as at the date of this Announcement would not be materially
different from the valuation given by CBRE as at 31 December 2023 and
contained in the CBRE property valuation report set out in Part A of Appendix
5 to this Announcement.
For the purposes of Rule 29.5 of the Takeover Code, the BBOX Board confirms
that CBRE has confirmed to it that an updated valuation as at the date of this
Announcement, of that part of BBOX's property portfolio valued by CBRE would
not be materially different from the valuation given by CBRE as at 31 December
2023 and contained in the CBRE property valuation report set out in Part B of
Appendix 5 to this Announcement.
For the purposes of Rule 29.5 of the Takeover Code, the BBOX Board confirms
that Colliers has confirmed to it that an updated valuation as at the date of
this Announcement, of that part of BBOX's property portfolio valued by
Colliers would not be materially different from the valuation given by
Colliers as at 31 December 2023 and contained in the Colliers property
valuation report set out in Part C of Appendix 5 to this Announcement.
Analyst and Investor Presentation
BBOX will host a presentation for analysts and investors via conference call
and webcast at 9 a.m. (UK time) today (21 March 2024) to discuss the
Combination. To participate in this conference call or webcast, please use the
following access details:
Webcast https://brrmedia.news/BBOX_UKCM
Conference Call
UK +44 (0) 33 0551 0200
US +1 786 697 3501
The presentation will also be accessible on-demand later today on BBOX's
website:
https://www.tritaxbigbox.co.uk/investors/shareholder-information/possible-all-share-offer-for-ukcm/
Enquiries:
BBOX
Colin Godfrey, CEO +44 (0) 20 8051 5060
Frankie Whitehead, Chief Financial Officer
Ian Brown, Head of Corporate Strategy & Investor Relations
Jefferies (Joint Lead Financial Adviser and Corporate Broker to BBOX) +44 (0) 20 7029 8000
Philip Noblet
Rishi Bhuchar
Paul Bundred
Stuart Klein
Andrew Morris
James Umbers
J.P. Morgan Cazenove (Joint Lead Financial Adviser and Corporate Broker to +44 (0) 203 493 8000
BBOX)
Massimo Saletti
James A. Kelly
Paul Pulze
Jonty Edwards
Akur (Financial Adviser to BBOX) +44 (0) 20 7493 3631
Anthony Richardson
Siobhan Sergeant
Kekst CNC (BBOX Media Enquiries)
Richard Campbell +44 (0) 7775 784 933
Guy Bates +44 (0) 7581 056 415
UKCM
Margaret Littlejohns, Senior Independent Director +44 (0) 20 7280 5569
Rothschild & Co (Lead Financial Adviser and Sole Rule 3 adviser to UKCM) +44 (0) 20 7280 5000
Alex Midgen
Sam Green
Jake Shackleford
Deutsche Numis (Joint Financial Adviser and Corporate Broker to UKCM) +44 (0) 20 7260 1000
Hugh Jonathan
George Shiel
FTI Consulting (UKCM Media Enquiries) +44 (0) 20 3727 1000
Richard Sunderland
Andrew Davies
Emily Smart
Ashurst LLP is acting as legal adviser to BBOX and Dickson Minto W.S. is
acting as legal adviser to UKCM in connection with the Combination.
Further Information
This Announcement is for information purposes only and is not intended to and
does not constitute or form part of an offer, invitation or the solicitation
of an offer or invitation to purchase, or otherwise acquire, subscribe for,
sell or otherwise dispose of any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Combination or otherwise nor
shall there be any purchase, sale, issuance, exchange or transfer of
securities of BBOX or UKCM or such solicitation pursuant to the Combination in
any jurisdiction in which such offer, invitation, solicitation, purchase,
sale, issuance, exchange or transfer is unlawful. The Combination will be
implemented solely pursuant to the terms of the Scheme Document (or, in the
event that the Combination is to be implemented by means of a Takeover Offer,
the Offer Document), which together with the Forms of Proxy (or form of
acceptance, if applicable), will contain the full terms and conditions of the
Combination, including details of how to vote in respect of the Combination.
Any decision in respect of, or other response to, the Combination should be
made on the basis of the information contained in the Scheme Document and the
Combined Circular and Prospectus.
BBOX will prepare the Combined Circular and Prospectus to be distributed to
BBOX Shareholders, containing information on the New BBOX Shares and the
Combined Group. UKCM and BBOX urge UKCM Shareholders to read the Scheme
Document and the Combined Circular and Prospectus carefully when they become
available because they will contain important information in relation to the
Combination, the New BBOX Shares and the Combined Group. Any vote in respect
of resolutions to be proposed at the UKCM Meetings or the BBOX General Meeting
to approve the Combination, the Scheme or related matters, should be made only
on the basis of the information contained in the Scheme Document and the
Combined Circular and Prospectus (in the case of UKCM Shareholders) and the
Combined Circular and Prospectus (in the case of BBOX Shareholders).This
Announcement does not constitute a prospectus or prospectus equivalent
document or an exempted document.
The statements contained in this Announcement are made as at the date of this
Announcement, unless some other time is specified in relation to them, and
publication of this Announcement shall not give rise to any implication that
there has been no change in the facts set forth in this Announcement since
such date.
Neither the GFSC nor the States of Guernsey take any responsibility for the
financial soundness of UKCM or for the correctness of any of the statements
made or opinions expressed with regard to it.
Information Relating to UKCM Shareholders
Please be aware that addresses, electronic addresses and certain other
information provided by UKCM Shareholders, persons with information rights and
other relevant persons for the receipt of communications from UKCM may be
provided to BBOX during the Offer Period as required under Section 4 of
Appendix 4 of the Takeover Code.
Overseas Jurisdictions
The release, publication or distribution of this Announcement in, into or from
jurisdictions other than the United Kingdom or Guernsey may be restricted by
law and/or regulation and therefore any persons who are subject to the laws of
any jurisdiction other than the United Kingdom or Guernsey should inform
themselves about and observe any applicable legal or regulatory requirements.
In particular, the ability of persons who are not resident in the United
Kingdom or Guernsey to vote their UKCM Shares with respect to the Scheme at
the Court Meeting or the UKCM General Meeting, or to execute and deliver Forms
of Proxy appointing another person to vote at the Court Meeting or the UKCM
General Meeting on their behalf, may be affected by the laws of the relevant
jurisdictions in which they are located. Any failure to comply with the
applicable restrictions may constitute a violation of the securities laws of
any such jurisdiction. To the fullest extent permitted by applicable law the
companies and persons involved in the Combination disclaim any responsibility
or liability for the violation of such restrictions by any person. This
Announcement has been prepared for the purpose of complying with English law,
Guernsey law and the Takeover Code and the information disclosed may not be
the same as that which would have been disclosed if this Announcement had been
prepared in accordance with the laws of jurisdictions outside the United
Kingdom or Guernsey.
Unless otherwise determined by BBOX or required by the Takeover Code, and
permitted by applicable law and regulation, the New BBOX Shares to be issued
pursuant to the Combination to UKCM Shareholders will not be made available,
directly or indirectly, in, into or from a Restricted Jurisdiction where to do
so would violate the laws in that jurisdiction and no person may vote in
favour of the Combination by any such use, means, instrumentality or form
within a Restricted Jurisdiction or any other jurisdiction if to do so would
constitute a violation of the laws of that jurisdiction. Accordingly, copies
of this Announcement and any formal documentation relating to the Combination
are not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in, into or from any Restricted Jurisdiction or
any other jurisdiction where to do so would constitute a violation of the laws
of that jurisdiction, and persons receiving such documents (including
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send such documents in, into or from any Restricted
Jurisdiction. Doing so may render invalid any related purported vote in
respect of the Combination. If the Combination is implemented by way of a
Takeover Offer (unless otherwise permitted by applicable law and regulation),
the Takeover Offer may not be made directly or indirectly, in or into, or by
the use of mails or any means or instrumentality (including, but not limited
to, facsimile, e-mail or other electronic transmission or telephone) of
interstate or foreign commerce of, or of any facility of a national, state or
other securities exchange of, any Restricted Jurisdiction and the Takeover
Offer may not be capable of acceptance by any such use, means, instrumentality
or facilities or from within any Restricted Jurisdiction.
The availability of New BBOX Shares pursuant to the Combination to UKCM
Shareholders who are not resident in the United Kingdom or Guernsey, or the
ability of those persons to hold such shares may be affected by the laws or
regulatory requirements of the relevant jurisdictions in which they are
resident. Persons who are not resident in the United Kingdom or Guernsey
should inform themselves of, and observe, any applicable legal or regulatory
requirements. UKCM Shareholders who are in doubt about such matters should
consult an appropriate independent professional adviser in the relevant
jurisdiction without delay.
Further details in relation to UKCM Shareholders in overseas jurisdictions
will be contained in the Scheme Document.
Additional Information for US Investors
The Combination relates to the shares of a Guernsey company with a listing on
the London Stock Exchange and is proposed to be implemented pursuant to a
scheme of arrangement provided for under Guernsey company law. A transaction
effected by means of a scheme of arrangement is not subject to the proxy
solicitation or the tender offer rules under the US Exchange Act. Accordingly,
the Combination is subject to the procedural and disclosure requirements,
rules and practices applicable in the United Kingdom or Guernsey involving a
target company incorporated in Guernsey and listed on the London Stock
Exchange, which differ from the requirements of US proxy solicitation or
tender offer rules. Financial information included in this Announcement and
the Scheme Document has been or will be prepared in accordance with UK IFRS or
EU IFRS and thus may not be comparable to financial information of US
companies or companies whose financial statements are prepared in accordance
with generally accepted accounting principles in the United States. Generally
accepted accounting principles in the United States differ in certain
significant respects from UK IFRS and EU IFRS.
If, in the future, BBOX elects, with the consent of the Panel, to implement
the Combination by means of a Takeover Offer and determines to extend such
Takeover Offer into the United States, such Takeover Offer will be made in
compliance with all applicable laws and regulations, including, without
limitation, to the extent applicable, Section 14(e) of the US Exchange Act and
Regulation 14E thereunder, and subject, in the case of participation by UKCM
Shareholders resident in the United States, to the availability of an
exemption (if any) from the registration requirements of the US Securities Act
and of the securities laws of any state or other jurisdiction of the United
States. Such Takeover Offer would be made by BBOX and no one else. In addition
to any such Takeover Offer, BBOX, certain affiliated companies and the
nominees or brokers (acting as agents) may make certain purchases of, or
arrangements to purchase, shares in UKCM outside such Takeover Offer during
the period in which such Takeover Offer would remain open for acceptance. If
such purchases or arrangements to purchase were to be made, they would be made
outside the United States and would comply with applicable law, including the
US Exchange Act. Any information about such purchases will be disclosed as
required in the United Kingdom and Guernsey, will be reported to a Regulatory
Information Service of the FCA and will be available on the London Stock
Exchange website: www.londonstockexchange.com.
The New BBOX Shares have not been and will not be registered under the US
Securities Act or under the securities laws of any state or other jurisdiction
of the United States. Accordingly, the New BBOX Shares may not be offered,
sold, resold, delivered, distributed or otherwise transferred, directly or
indirectly, in or into or from the United States absent registration under the
US Securities Act or an exemption therefrom and in compliance with the
securities laws of any state or other jurisdiction of the United States. The
New BBOX Shares are expected to be issued in reliance upon the exemption from
the registration requirements of the US Securities Act provided by section
3(a)(10) thereof.
None of the securities referred to in this Announcement have been approved or
disapproved by the SEC, any state securities commission in the United States
or any other US regulatory authority, nor have such authorities passed upon or
determined the fairness or merits of such securities or the Combination or
upon the adequacy or accuracy of the information contained in this
Announcement. Any representation to the contrary is a criminal offence in the
United States.
It may be difficult for US holders of UKCM Shares to enforce their rights and
claims arising out of the US federal securities laws, since BBOX and UKCM are
organised in countries other than the United States, and some or all of their
officers and directors may be residents of, and some or all of their assets
may be located in, jurisdictions other than the United States. US holders of
UKCM Shares may have difficulty effecting service of process within the United
States upon those persons or recovering against judgments of US courts,
including judgments based upon the civil liability provisions of the US
federal securities laws. US holders of UKCM Shares may not be able to sue a
non-US company or its officers or directors in a non-US court for violations
of US securities laws. Further, it may be difficult to compel a non-US company
and its affiliates to subject themselves to a US court's judgment.
The receipt of New BBOX Shares pursuant to the Combination by a US UKCM
Shareholder may be a taxable transaction for US federal income tax purposes,
and may also be a taxable transaction under applicable state and local tax
laws, as well as foreign and other tax laws. Each UKCM Shareholder is urged to
consult its independent professional adviser immediately regarding the tax
consequences of the Combination.
Important Notices Relating to Financial Advisers
Jefferies International Limited ("Jefferies") and Akur Limited ("Akur") which
are each authorised and regulated by the FCA in the United Kingdom, are acting
exclusively for BBOX and no one else in connection with the matters set out in
this Announcement and will not be responsible to anyone other than BBOX for
providing the protections afforded to clients of Jefferies or Akur nor for
providing advice in relation to any matter referred to in this Announcement.
Neither Jefferies nor Akur nor any of their 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 Jefferies or Akur in connection with this Announcement, any
statement contained herein or otherwise.
J.P. Morgan Securities PLC, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), and which is authorised in
the United Kingdom by the Prudential Regulation Authority (the "PRA") and
regulated by the PRA and the FCA, is acting as financial adviser exclusively
for BBOX and no one else in connection with the Combination and will not
regard any other person as its client in relation to the Combination and will
not be responsible to anyone other than BBOX for providing the protections
afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for
providing advice in relation to the Combination or any other matter or
arrangement referred to in this Announcement.
N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is
authorised and regulated by the FCA in the United Kingdom, is acting
exclusively as financial adviser to UKCM and for no one else in connection
with the matters described in this Announcement and will not be responsible to
anyone other than UKCM for providing the protections afforded to clients of
Rothschild & Co nor for providing advice in connection with any matter of
this referred to herein. Neither Rothschild & Co nor any of its affiliates
(nor their respective directors, officers, employees or agents) owes or
accepts any duty, liability or responsibility whatsoever (whether director or
indirect, whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Rothschild & Co in connection with this
Announcement, any statement contained herein, the Combination or otherwise.
Numis Securities Limited (trading for these purposes as Deutsche Numis)
("Deutsche Numis"), which is authorised and regulated by the FCA in the United
Kingdom, is acting exclusively for UKCM and for no one else in connection with
the subject matter of this Announcement and will not be responsible to anyone
other than UKCM for providing the protections afforded to its clients or for
providing advice in connection with the subject matter of this Announcement.
Neither Deutsche Numis nor any of its affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct, indirect,
consequential, whether in contract, in tort, under statute or otherwise) to
any person who is not a client of Deutsche Numis in connection with this
Announcement, any statement or other matter or arrangement referred to herein
or otherwise.
Cautionary Note Regarding Forward Looking Statements
This Announcement (including information incorporated by reference into this
Announcement), oral statements regarding the Combination and other information
published by BBOX and UKCM contain certain forward looking statements with
respect to the financial condition, strategies, objectives, results of
operations and businesses of BBOX and UKCM and their respective groups and
certain plans and objectives with respect to the Combined Group. These forward
looking statements can be identified by the fact that they do not relate only
to historical or current facts. Forward looking statements are prospective in
nature and are not based on historical facts, but rather on current
expectations and projections of the management of BBOX and UKCM about future
events, and are therefore subject to risks and uncertainties which could cause
actual results to differ materially from the future results expressed or
implied by the forward looking statements. The forward looking statements
contained in this Announcement include statements relating to the expected
effects of the Combination on BBOX and UKCM, the expected timing and scope of
the Combination and other statements other than historical facts. Forward
looking statements often use words such as "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue",
"will", "may", "should", "would", "could", or other words of similar meaning.
These statements are based on assumptions and assessments made by BBOX, and/or
UKCM in light of their experience and their perception of historical trends,
current conditions, future developments and other factors they believe
appropriate. By their nature, forward looking statements involve risk and
uncertainty, because they relate to events and depend on circumstances that
are expected to occur in the future and the factors described in the context
of such forward looking statements in this Announcement could cause actual
results and developments to differ materially from those expressed in or
implied by such forward looking statements. Although it is believed that the
expectations reflected in such forward looking statements are reasonable, no
assurance can be given that such expectations will prove to have been correct
and readers are therefore cautioned not to place undue reliance on these
forward looking statements.
There are several factors which could cause actual results to differ
materially from those expressed or implied in forward looking statements.
Among the factors that could cause actual results to differ materially from
those described in the forward looking statements are changes in global,
political, economic, business and/or competitive conditions, market and
regulatory forces, future exchange and interest rates, changes in tax rates
and future business combinations or dispositions.
Each forward looking statement speaks only as at the date of this
Announcement. Neither BBOX nor UKCM, nor their respective groups assumes any
obligation to update or correct the information contained in this Announcement
(whether as a result of new information, future events or otherwise), except
as required by applicable law or by the rules of any competent regulatory
authority.
No Profit Forecasts or Estimates
No statement in this Announcement (including any statement of estimated
synergies) is intended as a profit forecast or estimate for any period and no
statement in this Announcement should be interpreted to mean that earnings or
earnings per share or dividend per share for BBOX, UKCM or the Combined Group,
as appropriate, for the current or future financial periods would necessarily
match or exceed the historical published earnings or earnings per share or
dividend per share for BBOX, UKCM or the Combined Group as appropriate.
Quantified Financial Benefits Statement
The statements in the Quantified Financial Benefits Statement relate to future
actions and circumstances which, by their nature, involve risks, uncertainties
and contingencies. The synergies and cost savings referred to may not be
achieved, or may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. For the purposes of Rule
28 of the Takeover Code, the Quantified Financial Benefits Statement contained
in this Announcement is the responsibility of BBOX and the BBOX Directors.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in one
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 10th
Business Day (as defined in the Takeover Code) following the commencement of
the Offer Period and, if appropriate, by no later than 3.30 p.m. (London time)
on the 10th Business Day (as defined in the Takeover Code) 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 Takeover Code, any person who is, or becomes,
interested in one 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. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be
made by no later than 3.30 p.m. (London time) on the Business Day (as defined
in the Takeover Code) 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.
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). 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 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.
Rounding
Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.
Publication on Website and Availability of Hard Copies
A copy of this Announcement and the documents required to be published
pursuant to Rules 26.1 and 26.2 of the Takeover Code will be available,
subject to certain restrictions relating to persons resident in Restricted
Jurisdictions, for inspection on BBOX's website at
https://www.tritaxbigbox.co.uk/investors/shareholder-information/possible-all-share-offer-for-ukcm/
and on UKCM's website at https://www.ukcpreit.com/en-gb/merger/access by no
later than 12 noon (London time) on the Business Day following this
Announcement. For the avoidance of doubt, the contents of the websites
referred to in this Announcement are not incorporated into and do not form
part of this Announcement.
In accordance with Rule 30.3 of the Takeover Code, UKCM Shareholders and
persons with information rights may request a hard copy of this Announcement
by contacting UKCM's registrars, Computershare Investor Services (Guernsey)
Limited, c/o 13 Castle Street, St Helier, Jersey JE1 1ES or by calling
Computershare Investor Services (Guernsey) Limited on +0370 707 4040. Calls
are charged at the standard geographical rate and will vary by provider. Calls
outside the United Kingdom will be charged at the applicable international
rate. Lines are open between 8.30 a.m. to 5.30 p.m. (London time), Monday to
Friday (except public holidays in England and Wales). Please note that
Computershare Investor Services (Guernsey) Limited cannot provide any
financial, legal or tax advice. Calls may be recorded and monitored for
security and training purposes. For persons who receive a copy of this
Announcement in electronic form or via a website notification, a hard copy of
this Announcement will not be sent unless so requested. Such persons may also
request that all future documents, announcements and information to be sent to
them in relation to the Combination should be in hard copy form.
If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom
or, if not, from another appropriately authorised independent financial
adviser.
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.
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW BBOX SHARES EXCEPT ON THE BASIS OF THE
INFORMATION IN THE SCHEME DOCUMENT AND THE COMBINED CIRCULAR AND PROSPECTUS
WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION IS CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
FOR IMMEDIATE RELEASE.
21 March 2024
Recommended All-Share Combination
of
Tritax Big Box REIT plc ("BBOX") and UK Commercial Property REIT Limited
("UKCM")
to be effected by means of a Court-sanctioned scheme of arrangement under Part
VIII of the Companies Law of Guernsey
1. Introduction
The Boards of BBOX and UKCM are pleased to announce that they have reached
agreement on the terms of a recommended all-share combination of BBOX and
UKCM, pursuant to which BBOX will acquire the entire issued and to be issued
ordinary share capital of UKCM (the "Combination"), intended to be effected by
means of a Court-sanctioned scheme of arrangement between UKCM and the Scheme
Shareholders under Part VIII of the Companies Law of Guernsey (the "Scheme").
2. The Combination
Under the terms of the Combination, which will be subject to the Conditions
and other terms set out in this Announcement and to the full terms and
conditions which will be set out in the Scheme Document, Scheme Shareholders
will be entitled to receive:
0.444 New BBOX Shares for each UKCM Share
(the "Exchange Ratio")
The Exchange Ratio is on an EPRA NTA for EPRA NTA basis with reference to
BBOX's 31 December 2023 EPRA NTA of 177.2 pence per share and UKCM's 31
December 2023 EPRA NTA of 78.7 pence per share.
Following completion of the Combination, UKCM Shareholders will own
approximately 23.3 per cent. and existing BBOX Shareholders will own
approximately 76.7 per cent. of the issued ordinary share capital of the
Combined Group.
Based on BBOX's Closing Price of 160.2 pence per BBOX Share on 9 February 2024
(being the day of the commencement of the Offer Period), the Combination
implies a value of 71.1 pence per UKCM Share and approximately £924 million
for the entire issued and to be issued ordinary share capital of UKCM which
represents:
· a premium of 10.8 per cent. to the UKCM undisturbed Closing Price of 64.2
pence per UKCM Share on 9 February 2024 (being the day of the commencement of
the Offer Period); and
· a premium of 23.0 per cent. to the volume weighted average price of 57.8
pence per UKCM Share for the six month period ended 9 February 2024 (being the
day of the commencement of the Offer Period).
The New BBOX Shares will be issued credited as fully paid-up and will rank
pari passu in all respects with the BBOX Shares in issue at that time,
including the right to receive and retain dividends and other distributions
(if any) announced, declared, made or paid by reference to a record date on or
after the Effective Date (save, for the avoidance of doubt, any BBOX Permitted
Dividend). Applications will be made to the FCA for the New BBOX Shares to be
admitted to the Official List and to the London Stock Exchange for the New
BBOX Shares to be admitted to trading on the London Stock Exchange's Main
Market for listed securities.
The UKCM Shares which will be acquired under the Combination will be acquired
fully paid and free from all liens, equities, charges, encumbrances, options,
rights of pre-emption and any other third party rights and interests of any
nature and together with all rights now or hereafter attaching or accruing to
them, including voting rights and the right to receive and retain in full all
dividends and other distributions (if any) declared, made or paid, or any
other return of capital (whether by reduction of share capital or share
premium account or otherwise) made or paid on or after the date of this
Announcement, save for the UKCM Permitted Dividends.
3. Background to and Reasons for the Combination
BBOX is the largest listed investor in UK high-quality logistics warehouse
assets and controls the UK's largest logistics-focused development land
platform, with a portfolio valued at approximately £5.1 billion. BBOX focuses
on acquiring, developing and actively managing well-located, modern logistics
assets to deliver attractive and sustainable returns for its shareholders.
BBOX owns and manages a portfolio of high-quality "Big Box" (very large)
logistics warehouses which have delivered a 100 per cent. rent collection
record since IPO over 10 years ago. With the objective of broadening its "end
to end" customer offering in terms of building size and location, BBOX has
more recently acquired "last mile" and urban logistics assets which have the
potential to enhance returns by providing significant scope for near term
rental growth. In line with this, during 2023 BBOX successfully completed the
acquisition of approximately £110 million of urban logistics assets and will
continue to selectively acquire similar attractive assets.
BBOX also continues to invest in its development pipeline, whereby
shareholders benefit from the attractive financial returns from development
activities targeting a 6 to 8 per cent. yield on cost as well as enhancing
BBOX's overall portfolio quality from the development of new, best-in-class
logistics assets across a variety of size bands, from "Small Box" to "Big
Box". For the financial year ending 31 December 2024, BBOX is targeting a
yield on cost of 7.0 per cent. for its development activity.
Over the last 18 months, BBOX has funded its acquisitions and investments in
its pipeline of development opportunities substantially through portfolio
recycling, with £327 million of disposals completed in 2023 (in aggregate
above book value). A continuation of this successful strategy would require
BBOX to sell further core logistics real estate assets, which it may ideally
prefer to retain.
BBOX recognises the quality of the UKCM portfolio and sees a Combination with
UKCM as being highly complementary to its current strategy through
simultaneously:
(a) Acquiring a c.£740 million portfolio of high-quality logistics
assets, across a range of sizes and locations which benefit from substantial
near-term rental reversionary potential, in line with BBOX's objective of
increasing its range of building sizes. The UKCM portfolio has a strong
weighting towards the key logistics markets of the Midlands and South East
(including London) where the BBOX Manager believes supply is particularly
constrained and occupational demand remains robust and where the BBOX Manager
has extensive experience; and
(b) Providing BBOX with an attractive portfolio of c.£475 million
of non-logistics assets including retail parks, supermarkets, student
accommodation and offices which can further drive returns for shareholders
through a combination of active asset management and recycling of capital
through disposals to provide the potential for accelerated investment into
BBOX's accretive development pipeline and other accretive investment
opportunities. The phasing of such disposals will be based upon the completion
of individual asset specific optimisation plans, prevailing market conditions
and the timing of its development commitments, however BBOX's current
expectation is that it will have substantially exited this non-logistics
portfolio within approximately 24 months from completion of the Combination.
The Boards of BBOX and UKCM believe the Combination has compelling strategic
and financial rationale, building on BBOX's existing strategy and proven track
record of delivering attractive and sustainable returns for shareholders,
further details of which are set out below:
(a) High-quality, logistics-focused portfolio with significant
rental reversion potential - the Combination creates a c.£6.3 billion
portfolio focused on high-quality logistics assets, with a diverse customer
base generating over £293 million of rental income per annum with significant
embedded and growing rental reversion potential. BBOX believes that this is a
unique opportunity to acquire a high-quality logistics-focused portfolio of
scale, which otherwise is unavailable to acquire in the open market, and, as a
specialist in UK logistics, to utilise its extensive experience to deliver
further value from these assets;
(b) Significant near-term rental growth potential - UKCM's portfolio
provides significant near term rental growth potential, with a portfolio ERV
of £80 million, 24 per cent. ahead of current contracted rent and 79 per
cent. of the logistics portfolio rental reversion subject to lease events
occurring by 2026:
(i) 85 per cent. of the portfolio rental reversion is within
UKCM's £740 million logistics portfolio, which comprises 19 assets with a
total gross lettable area of 4.4 million square feet, with identified asset
management providing value enhancement potential, and is weighted towards the
Midlands and South East (including London);
(ii) BBOX's exclusive focus on UK logistics, and active approach to
asset management, better enables it to secure the capture of rental reversion
in respect of logistics assets, in addition to identifying further asset
management opportunities to drive value; and
(iii) while BBOX's intention is not to be a long-term owner of
UKCM's remaining portfolio of non-logistics assets, it is high-quality and
diversified across a mix of commercial property sectors, in core locations
across the UK, with a diverse customer base and provides an attractive net
initial yield of 6.4 per cent. It also has the potential for value creation
through identified asset management opportunities to sale.
(c) Enhanced BBOX customer offering - the Combination represents a
compelling opportunity for BBOX to immediately enhance its overall offering to
customers by further diversifying its portfolio across a broader range of
logistics property sizes, locations and tenant uses, from "Mega-Boxes" to
smaller, strategically located, logistics assets within key urban locations,
in an efficient and cost-effective manner;
(d) Non-logistics assets to fund attractive investment and
development opportunities through capital recycling - the Combined Group will
adopt a disciplined approach to substantially exiting the non-logistics assets
(expected to be c.8 per cent. of the Combined Group's GAV on completion of the
Combination) within approximately 24 months from completion of the
Combination. The capital recycling will provide approximately two years of
development capex funding. This builds on BBOX's successful track record of
targeted disposals to recycle capital into development opportunities for new,
"triple net" leased, best-in-class logistics assets at a 6 to 8 per cent.
yield on cost, with 2024 development activity targeting a yield on cost of 7.0
per cent. This will result in a Combined Group portfolio that comprises
best-in-class logistics assets capable of delivering superior total returns to
shareholders;
(e) Attractive and liquid non-logistics portfolio with proven value
- UKCM's non-logistics assets are typically modern, in strong locations which
are expected to be both appealing to occupiers and attractive to the
investment market if offered for sale, reflected by the disposal of two office
assets post the 2023 year end, both of which were in line with prevailing book
values. BBOX also believes that an improving macro-economic environment could
impact favourably on investment values in the commercial property investment
market, thus improving liquidity and enhancing value;
(f) Immediately identifiable cost savings - the Combined Group
will benefit from savings in recurring costs of approximately c.£4.0 million
per annum, the majority of which are expected to be effective immediately on
completion of the Combination arising from the unification of investment
management services under the BBOX Manager and operational cost savings, as
outlined in the Quantified Financial Benefits Statement set out in this
Announcement, with additional anticipated medium-term costs savings from
rotation into "triple net" leases and financing synergies;
(g) Enhanced earnings - the Combination is expected to be
immediately accretive to adjusted earnings per share for both sets of
shareholders, enhancing the Combined Group's ability to target sustainable
earnings and dividend progression, with the potential for future synergies
resulting from enhanced scale and operational efficiencies;
(h) Compelling excess returns over cost of capital - BBOX expects
UKCM's logistics assets to deliver unlevered returns materially above BBOX's
cost of capital over the medium-term. BBOX also believes the market has
opportunities for value growth in line with the macro-economic environment.
BBOX expects the capital allocation to the non-logistics assets to be
temporary, until the capital is recycled into BBOX's logistics development
pipeline and/or other accretive investment opportunities;
(i) Value creation from capital recycling - taking into account
the financial effects of recycling capital by disposing of UKCM's c.£475
million of non-logistics assets and funding accelerated investments into
BBOX's logistics development platform, and excluding the impact of future
rental growth and yield movements, such development activity would be expected
to generate upon stabilisation mid-single digit growth in EPRA NTA per share,
adjusted earnings per share and dividends per share;
(j) Active asset management and sector leading environmental,
social and governance ("ESG") credentials unlocking value - BBOX has a strong
history of active asset management, coupled with sector leading ESG
credentials. A skillset which can add additional value to UKCM's c.£1.2
billion portfolio and provide significant scope for increased earnings
efficiency post completion of the Combination. The BBOX team has the sector
knowledge which has identified opportunities to add value through asset
management prior to disposal of UKCM's non-logistics assets;
(k) Significant opportunity to unlock value from specialised,
experienced, and entrepreneurial manager - BBOX Manager will act as sole
investment manager to the Combined Group enabling it to benefit from BBOX
Manager's in-house team of experts who have a proven track record of
successfully managing funds across a diverse range of asset classes. BBOX
Manager's entrepreneurial culture and direct proactive approach to asset
management, undertaken in-house will help to drive value creation in the
combined portfolio by creating unique insight, stronger customer
relationships, and ensuring opportunities to add value are rigorously pursued;
(l) Robust balance sheet with potential financing synergies - the
Combined Group will seek to preserve a robust and conservatively leveraged
balance sheet with a reduced loan-to-value ratio of approximately 29 per
cent., significant available liquidity, no near-term debt maturities, expected
cost of capital benefits and greater financial flexibility around net
investment activity, while BBOX's investment grade credit rating provides the
potential for a lower cost of capital for the Combined Group; and
(m) Greater share liquidity with more diversified shareholder base -
the Combination would create the fourth largest UK REIT, with a combined EPRA
NTA of approximately £4.4 billion, and a more diversified, broader
shareholder base with shareholders benefitting from increased share liquidity
from enlarged scale and index weightings.
4. Quantified Financial Benefits Statement
The BBOX Directors, having reviewed and analysed the potential cost savings of
the Combined Group, as well as taking into account factors they can influence,
believe the Combined Group can deliver shareholder value through the expected
realisation of approximately £4.0 million of pre-tax recurring cost
synergies. The cost synergies are expected to be realised principally from:
(a) Investment management fees: unification of investment management
services under the BBOX Manager, delivering an expected £2.6 million of cost
synergies per annum derived from lower investment management fees charged on
the UKCM EPRA NTA ; and
(b) Corporate and administrative costs: de-duplication and
rationalisation of duplicated listing, administration and operational expenses
delivering an estimated £1.4 million of cost synergies per annum.
The identified cost savings are contingent on the completion of the
Combination and would not be achieved independently. The estimated cost
synergies referred to above reflect both the beneficial elements and the
relevant costs.
The UKCM Manager has agreed to waive the early termination payment of £6.7
million which would be contractually payable by UKCM on completion of the
Combination as a result of the UKCM IMA being agreed to be terminated at such
time under the UKCM IMA Termination Agreement. The BBOX Directors have
considered other recurring or one-off costs in connection with realising the
expected cost synergies and have reflected these in the expected recurring
cost synergy figure.
Potential areas of dis-synergy have been considered by the BBOX Directors and
are reflected in the analysis.
These statements relating to estimated investment management fee savings and
other identified cost savings relate to future actions or circumstances which
by their nature involve risks, uncertainties and contingencies. As a
consequence, the identified synergies and estimated savings referred to may
not be achieved, may be achieved later or sooner than estimated, or those
achieved could be materially different from those estimated.
Further information on the bases of belief supporting the Quantified Financial
Benefits Statement, including the principal assumptions and sources of
information, is set out in Appendix 4 to this Announcement.
5. Recommendations
Recommendation of UKCM Directors
The UKCM Recommending Directors, who have been so advised by Rothschild &
Co as to the financial terms of the Combination, consider the terms of the
Combination to be fair and reasonable. In providing its advice to the UKCM
Directors, Rothschild & Co has taken into consideration the commercial
assessments of the UKCM Directors. Rothschild & Co is providing
independent financial advice to the UKCM Directors for the purposes of Rule 3
of the Takeover Code.
Accordingly, taking into account the factors set out below, the UKCM
Recommending Directors intend to recommend unanimously that Scheme
Shareholders vote in favour of the Scheme at the Court Meeting and the UKCM
Shareholders in favour of the resolutions to be proposed to shareholders at
the UKCM General Meeting (or, if implemented by a Takeover Offer, to accept
such Takeover Offer), as the UKCM Recommending Directors have irrevocably
undertaken to do so in respect of their own beneficial holdings of 427,666
UKCM Shares representing, in aggregate, approximately 0.03 per cent. of the
issued ordinary share capital of UKCM on 20 March 2024 (being the last
Business Day prior to the release of this Announcement).
Recommendation of BBOX Directors
As a result of its size, the Combination constitutes a Class 1 transaction for
BBOX for the purposes of the Listing Rules. Accordingly BBOX will be required
to seek the approval of the BBOX Shareholders for the Combination at the BBOX
General Meeting. The Combination will also be conditional on the approval of
the BBOX Shareholders of the issuance of the New BBOX Shares at the BBOX
General Meeting. The BBOX Directors consider the Combination to be in the best
interests of BBOX and the BBOX Shareholders as a whole and intend unanimously
to recommend that BBOX Shareholders vote in favour of all of the resolutions
to be proposed at the BBOX General Meeting which will be convened in
connection with the Combination, as they have irrevocably undertaken to do, or
procure to be done, in respect of their own beneficial holdings of 390,170
BBOX Shares representing, in aggregate, approximately 0.02 per cent. of BBOX's
issued ordinary share capital on 20 March 2024, being the last Business Day
prior to the release of this Announcement.
The BBOX Directors have received financial advice from Jefferies and J.P.
Morgan Cazenove in relation to the Combination. In providing their advice to
the BBOX Directors, Jefferies and J.P. Morgan Cazenove have relied upon the
BBOX Directors' commercial assessment of the Combination.
6. Background to and Reasons for the UKCM Board
recommendation
Background on UKCM
UKCM's strategy is to provide shareholders with an attractive and growing
level of income with the potential for capital growth.
UKCM holds a diversified portfolio of property, weighted towards industrial
and logistics (61 per cent. of the portfolio value), retail warehouses and
supermarkets (14 per cent.), offices (9 per cent.), leisure and hotels (11 per
cent.) and student halls (5 per cent.). Whilst sector activity has been
impacted by recent economic uncertainty, industrial and logistics, retail
warehousing and student halls are sectors that are supported by macroeconomic
or demographic trends.
Since IPO in 2007, UKCM's portfolio has marginally outperformed the MSCI
Balanced Portfolios Quarterly Property Index against which it reports (the
"Benchmark Index"), with an annualised total property return of 4.7 per cent.
compared to an annualised total property return of 3.9 per cent. for the
Benchmark Index over the same period. On a total accounting return basis
(defined as EPRA NTA per share growth plus cumulative dividends per share),
UKCM has delivered a return of 4.0 per cent., 3.0 per cent. and 56.0 per cent.
over the 3, 5 and 10 year periods to 31 December 2023, respectively. In 2023
UKCM delivered 3.0 per cent. EPRA NTA total return and 6.3 per cent. growth in
EPRA EPS.
UKCM has a robust and flexible balance sheet with, following disposals post 31
December 2023, a loan-to-value ratio of 15.2 per cent., weighted average cost
of drawn debt of 3 per cent. and 98 per cent. of UKCM's debt being at a low
fixed rate. All covenants are fully covered.
Background to and Reasons for the Recommendation
Over recent years, UKCM's share price has traded at a persistent discount to
EPRA NTA. This discount has averaged 21.0 per cent. over the last 5 years,
26.3 per cent. over the last 3 years and 33.7 per cent. over the last 12
months, in each case measured to 31 December 2023. The Board of UKCM believes
the following factors have contributed to UKCM's persistent trading discount:
· a highly concentrated shareholder register, in particular with
Phoenix's 43.4 per cent. shareholding;
· against the background of sector consolidation, the relative lack of
scale and relevance of UKCM for UK public market REIT investors; and
· UKCM's relatively low share liquidity for a FTSE 250 constituent.
In addition, UKCM's growth potential has been constrained by its inability,
due to its trading discount and shareholder register, to raise new equity
capital on attractive terms from the public markets.
In May 2023, the Board of UKCM appointed Rothschild & Co to undertake a
strategic review, including of the options to narrow UKCM's share trading
discount relative to EPRA NTA. The review considered a range of options for
UKCM, both as a standalone company and combinations with other listed groups,
with an initial focus on M&A opportunities where UKCM might act as
consolidator. The review also formed the framework against which the financial
and strategic merits of subsequent proposals were measured.
On 8 November 2023, the Board of UKCM announced it was in discussions with
Picton Property Income Limited ("Picton") in relation to a possible all-share
merger on an EPRA NTA to EPRA NTA basis. UKCM shareholders would have held
approximately two thirds of the combined group.
Whilst the Board of UKCM was in favour of a combination with Picton on the
terms proposed, discussions with Picton were terminated following the Board of
UKCM receiving confirmation from its largest shareholder, Phoenix, that it was
not supportive of the merger.
Following the public announcement described above, the Board of UKCM has
received expressions of interest from other listed and private counterparties,
including BBOX. Aside from BBOX, no other formal alternative proposal for UKCM
has been received from any other third party.
The Combination follows UKCM receiving four proposals from BBOX over a period
of negotiation of approximately two months. The Exchange Ratio of 0.444 New
BBOX Shares for each UKCM Share represents a very material increase relative
to the terms of the initial proposal from BBOX.
The Board of UKCM remains confident in the fundamental strength of UKCM's
portfolio, comprising a resilient and reversionary industrial weighted
portfolio, a strong balance sheet with low gearing, and recent successful
re-cycling of capital through selected disposals at book value. However, the
Board of UKCM also believes that the structural factors and constraints
outlined above are likely to persist, in particular the concentrated
shareholder register and persistent relatively low levels of liquidity,
impacting UKCM's share price and ability to execute on alternative strategic
options.
Strategic and Financial Rationale for the Combination with BBOX
The Board of UKCM has carefully considered the financial and strategic
benefits of the Combination with BBOX. In particular, the Board of UKCM has
considered the following benefits of a Combination:
· As an all-share combination, UKCM Shareholders are not crystallising
an offer in cash at a discount to EPRA NTA per UKCM Share, but instead will
continue to benefit from the opportunity, benefits and risks of share
ownership in the Combined Group;
· The Exchange Ratio of 0.444 New BBOX Shares per UKCM Share held will
result UKCM Shareholders owning approximately 23.3 per. cent of the issued
share capital of the Combined Group, regardless of the BBOX Share price on any
one day. This ownership percentage represents UKCM's share of the Combined
Group's EPRA NTA. This means that, before the costs of the proposed
Combination, UKCM shareholders will hold the equivalent 31 December 2023 EPRA
NTA in the Combined Group as UKCM's 31 December 2023 EPRA NTA, being
approximately 78.7 pence per UKCM share, meaning UKCM shareholders are
suffering no loss or dilution of fundamental EPRA NTA per share from the
Combination;
· BBOX, like UKCM, benefits from a low cost and predominantly fixed
rate debt structure, which has significant mark-to-market value which is not
included in the EPRA NTA measure. The mark-to-market value of fixed rate debt
is greater for BBOX as a proportion of its Net Asset Value, than for UKCM as a
proportion of its own Net Asset Value, which is favourable for UKCM
shareholders given the Exchange Ratio is based on EPRA NTA;
· Notwithstanding the fluctuation in the BBOX Share price since 9
February 2024 (being the day of the commencement of the Offer Period), the
Combined Group is expected to benefit from an improvement in long-term share
price rating relative to EPRA NTA, versus UKCM standalone, as evidenced by
BBOX having traded, on average, at a stronger share price to EPRA NTA ratio
than UKCM by +15 ppts over the last 5 years, +19 ppts over the last 3 years
and +10 ppts over 12 months (each period being to 31 December 2023). The UKCM
Recommending Directors' view is that this has in part been driven by BBOX's
superior total accounting returns over similar time periods;
· The Combination represents a share price premium of 10.8 per cent. to
the undisturbed Closing Price of a UKCM Share on 9 February 2024 (being the
day of the commencement of the Offer Period);
· A significant increase in scale, becoming the fourth largest UK REIT
with a combined portfolio value of £6.3 billion and EPRA NTA of £4.4
billion. Further, this increased scale is expected to improve overall share
liquidity for UKCM Shareholders from a higher free-float and a more diverse
shareholder base;
· An immediate, significant increase in earnings per share for UKCM
Shareholders together with a covered dividend;
· A saving in annual running costs for the Combined Group are expected,
with synergies of approximately £4.0 million per annum to be realised
principally through BBOX's lower management fee and removal of duplicate
corporate and administrative costs, as outlined in the Quantified Financial
Benefits Statement set out in this Announcement;
· BBOX's land bank and development capability provide a differentiated
source of income growth and development profit in attractive sub-markets,
supporting further earnings enhancement alongside the embedded rental
reversion present in both portfolios;
· BBOX's confirmation of its intention to pay a well-covered full year
2024 dividend which is to be not less than the full year 2023 equivalent UKCM
dividend; and
· The support of UKCM's two largest shareholders, Phoenix and Investec,
who together have given support representing 56.5 per cent. of UKCM's issued
ordinary share capital on 20 March 2024 (being the last Business Day prior to
release of this Announcement).
Other Considerations
In reaching their recommendation, the UKCM Recommending Directors have also
considered that an investment in the Combined Group will differ from an
investment in UKCM, given the Combined Group will (i) primarily be exposed to
the performance, opportunities and risks of a significantly higher weighting
towards the industrial and logistics sector with a more concentrated tenant
base; (ii) have higher leverage than UKCM; and (iii) have a higher exposure to
logistics development than UKCM's current overall development exposure.
However, in reaching their recommendation, the UKCM Recommending Directors
also noted that, amongst other things:
· The combined portfolio will have strong fundamentals including a
weighted average unexpired lease term of 10.5 years, mix of rental review
types with 42 per cent. index-linked, significant embedded reversion and a
high-quality tenant base. Further, BBOX has achieved a 100 per cent. rent
collection in the period from IPO to 31 December 2023;
· Although the Combined Group's gearing is expected to be higher than
UKCM's current gearing levels, BBOX's leverage remains in-line with key peers
and the staggered nature of the debt maturities is expected to help mitigate
interest rate risks; and
· BBOX's development platform provides an additional source of future
growth, with a high-quality, specialist, in-house development team with a
proven track record.
Accordingly, taking into account the factors set out above, the UKCM
Recommending Directors intend to recommend unanimously that Scheme
Shareholders vote in favour of the Scheme at the Court Meeting and the UKCM
Shareholders to vote in favour of the resolution to be proposed to UKCM
Shareholders at the UKCM General Meeting (or, if implemented by a Takeover
Offer, to accept such Takeover Offer), as the UKCM Recommending Directors have
irrevocably undertaken to do so in respect of their own beneficial holdings of
427,666 UKCM Shares, in aggregate, representing approximately 0.03 per cent.
of the issued ordinary share capital of UKCM on 20 March 2024 (being the last
Business Day prior to release of this Announcement).
The opinion reflects the views of the UKCM Recommending Directors, which are
not shared by the UKCM Dissenting Director and for which the UKCM Dissenting
Director is not responsible. The UKCM Dissenting Director's opinion is set out
in paragraph 7 below.
7. Dissenting Director's Statement
Mr Pereira Gray, the Chairman of UKCM, is not recommending the Combination to
UKCM Shareholders, though given the support of UKCM's two largest
shareholders, he accepts that the proposed Combination should be put to UKCM
Shareholders.
In arriving at his dissenting view, he has considered the following matters,
amongst others.
Mr Pereira Gray believes that there is an ongoing role in the UK REIT
landscape for diversified, low geared, listed UK real estate exposure for
investors in companies such as UKCM, possibly increased in scale by means of a
combination with another UK REIT.
Mr Pereira Gray recognises the merits of the Combination as described
elsewhere in this Announcement but does not consider that the Combination
makes for a compelling strategic rationale for UKCM Shareholders given the
different investment strategies and asset make-up of the two businesses. BBOX
employs a single-sector specialist "Big Box" property investment strategy with
a higher proportion of long index-linked and fixed rental uplift leases, a
significant development programme, and a higher level of gearing than UKCM.
Whilst recognising that industrial property is an attractive property market
sector today, Mr Pereira Gray values the flexibility provided by a diversified
investment strategy and does not believe that shares in UKCM and shares in
BBOX will perform similarly for shareholders over time.
Mr Pereira Gray acknowledges that UKCM's market capitalisation has shown a
persistent discount to Net Asset Value in recent years. The strong rising
trend of the last six months has, however, led to UKCM delivering the second
highest share price total return within the Listed Property Sector over the
last 12 months. UKCM now offers a narrower than average discount to underlying
Net Asset Value relative to its Listed Property Sector peers, and Mr Pereira
Gray wishes to continue to promote the merits of the company to investors.
The undisturbed share price of UKCM at close of business 8 February 2024, the
day after the announcement of the end of year results, and the day before the
leak of the dialogue with BBOX was 65.40 pence per share. The current implied
merger price offers a limited premium over the undisturbed share price on 8
February 2024 in return for giving up control of UKCM. There remains no
certainty of the price at which UKCM Shares might actually convert into BBOX
Shares given daily volatility in the BBOX share price.
Mr Pereira Gray believes that other parties would have come forward had there
been a more open and comprehensive sales process, and that this could have led
to an alternative and potentially improved proposal for UKCM. It is recognised
that the two largest shareholders support the Combination, but Mr Pereira Gray
does not know that this is the highest price or the best value that could have
been achieved for all UKCM Shareholders in other circumstances and given a
longer time period.
Mr Pereira Gray believes that an orderly liquidation would generate a higher
net return to shareholders than the implied offer price but acknowledges that
a merger with BBOX could deliver a higher net present value to UKCM
Shareholders over time assuming growth in the value of BBOX's core investment
portfolio and possible narrowing of the discount at which the BBOX Shares
currently trade.
Mr Pereira Gray recognises the attractions of the proposed merger for larger
shareholders but, in the light of his concerns that the Combination has not
been sufficiently market tested, he does not on balance feel able to recommend
the Combination to UKCM Shareholders and will abstain from voting at the Court
Meeting and the UKCM General Meeting.
The opinion above reflects the views of the UKCM Dissenting Director, which
are not shared by the UKCM Recommending Directors and for which the UKCM
Recommending Directors are not responsible.
8. Further Information Relating to UKCM
UKCM is a FTSE 250 UK REIT listed on the premium segment of the Official List.
UKCM aims to provide its shareholders with an attractive level of income
together with the potential for capital and income growth from investing in a
diversified portfolio of high-quality UK commercial properties, weighted
towards sectors that benefit from strong underlying structural and societal
drivers.
UKCM's portfolio of 37 properties is valued at £1.21 billion with a net
initial yield of 5.1 per cent., reversionary yield of 6.3 per cent. and EPRA
NTA of £1.0 billion. UKCM has a conservatively leveraged balance sheet with a
loan-to-value ratio of 15 per cent. and a weighted cost of drawn debt of 3.0
per cent. (following disposals post 31 December 2023). As at 20 March 2024
(being the last Business Day prior to release of this Announcement), UKCM had
a market capitalisation of £841 million.
UKCM's portfolio comprises assets across a diverse mix of sectors:
(a) Industrial logistics (c.61 per cent. of total GAV; 4.3 per cent.
net initial yield and 6.0 per cent. reversionary yield): diverse logistics
portfolio comprising mix of multi-let industrial estates and single-let "Big
Box" distribution units in strategic locations predominantly throughout the
South East and the Midlands;
(b) Alternatives (Leisure, Hotel and Student Accommodation) (c.16
per cent. of total GAV; 6.4 per cent. net initial yield and 6.2 per cent.
reversionary yield): portfolio of diverse alternative assets including: three
cinema-anchored leisure schemes; two purpose built student accommodation
assets in Edinburgh and Exeter; and two hotel assets including a Hyatt
development scheduled for completion in Q3 2024;
(c) Retail (c. 14 per cent. of total GAV; 6.3 per cent. net initial
yield and 6.1 per cent. reversionary yield) portfolio comprising two
supermarkets and four retail parks dominated by either bulky goods retailers
or convenience and discount operators; and
(d) Offices (c.9 per cent. of total GAV; 6.7 per cent. net initial
yield and 9.0 per cent. reversionary yield): portfolio of five well-located
regional and South East focused office assets.
9. Information Relating to BBOX
BBOX is a FTSE 250 UK REIT listed on the premium segment of the Official List.
BBOX is the largest listed UK REIT that invests primarily in UK high-quality
logistics warehouse assets and controls the largest logistics-focused
development land platform in the UK. BBOX is committed to delivering
attractive and sustainable returns for shareholders by investing in and
actively managing existing built investments and land suitable for logistics
development. BBOX focuses on well-located, modern logistics assets, typically
let to institutional-grade tenants on long-term leases with upward-only rent
reviews and geographic and tenant diversification throughout the UK. BBOX's
portfolio is valued at £5.1 billion with an EPRA NTA per share of 177.2
pence. As at 20 March 2024 (being the last Business Day prior to the release
of this Announcement), BBOX had a market capitalisation of £2.9 billion.
In the period from its IPO in December 2013 to 20 March 2024, (being the last
Business Day prior to the release of this Announcement), BBOX has delivered on
a total accounting return basis, a return of approximately 145.8 per cent., a
total shareholder return of approximately 139.6 per cent. and has grown its
market capitalisation to £2,858 million. This has resulted in outperformance
versus the FTSE 350 Real Estate index.
10. Intentions for the Combined Group
Property strategy
With effect from the completion of the Combination, BBOX Manager will provide
investment management, administrative and advisory services to the Combined
Group. BBOX expects to continue BBOX's stated strategy and invest in
high-quality industrial and logistics assets. As part of this strategy BBOX
will, over the short to medium term, actively manage the non-logistics assets
including retail parks, supermarkets, student accommodation and offices and
seek to recycle capital through disposals, with the recycled capital being
invested in BBOX's high-quality and accretive development pipeline. The timing
and phasing of such disposals will be based upon prevailing market conditions
and the required asset optimisation (which will necessarily be individual
asset specific) of any such disposals, however BBOX's current expectation is
that it will have substantially exited this entire portfolio within
approximately 24 months of completion of the Combination.
Board composition and governance arrangements
BBOX intends to delist UKCM immediately following the Effective Date.
Consequently, UKCM will not require listed company governance structures and
accordingly, it is intended that each of the UKCM Directors will step down
from the Board of UKCM and its subsidiaries (as applicable) upon the Effective
Date.
Employees, fixed assets, research and development
As UKCM is an externally-managed UK REIT, UKCM does not have any employees and
therefore does not operate any pension schemes, nor does it have any
arrangements in place for any employee involvement in its capital.
UKCM has no place of business, fixed assets (other than its property
portfolio), research and development function or headquarters.
Investment management arrangements
BBOX Manager, which provides investment management services to BBOX, will
provide such services to the Combined Group. Accordingly, on completion of the
Combination, the UKCM IMA between UKCM and UKCM Manager will be terminated.
The UKCM Manager has agreed to waive the early termination payment of £6.7
million which would be contractually payable by UKCM on completion of the
Combination as a result of the UKCM IMA being agreed to be terminated at such
time.
As a result of the termination of the UKCM IMA, upon completion of the
Combination, certain persons employed by the UKCM Manager (or one of its group
companies), who are wholly or mainly assigned to provide services to UKCM (the
"Employees"), would, under TUPE, transfer their employment to BBOX Manager.
BBOX Manager and UKCM Manager intend to cooperate on the employee consultation
process required in relation to the Employees.
The arrangements relating to the termination of the UKCM IMA and certain
provisions relating to the Employees are provided for in the UKCM IMA
Termination Agreement. The key terms of the UKCM IMA Termination Agreement are
described in paragraph 11 below.
Investment management fees
With effect from completion of the Combination, the fee payable to BBOX
Manager for the provision of investment management services to the Combined
Group is set out in the BBOX IMA. Such fee will be payable in cash by the
Combined Group each quarter and is calculated based on a percentage of the
Combined Group's EPRA NTA disregarding cash or cash equivalents held. The fee
is payable quarterly in arrears and BBOX Manager is obliged to apply 25 per
cent. of the fee in the subscription or acquisition (as applicable) of shares
of BBOX. If the Combined Group buys or sells any assets after the date at
which the relevant EPRA NTA is calculated, the EPRA NTA is adjusted pro rata
for the net purchase or sale price, less any third-party debt drawn or repaid
whilst remaining capped at EPRA NTA.
The relevant advisory fee percentage for the Combined Group (in each instance
applied to EPRA NTA disregarding cash and cash equivalents) will be 0.7 per
cent. up to and including £2 billion, 0.6 per cent. above £2 billion and up
to and including £3 billion, 0.5 per cent. above £3 billion and up to and
including £3.5 billion and 0.4 per cent. above £3.5 billion. The basis and
calculation of the advisory fee is in line with the existing BBOX fee
structure.
Listing and registered office
Following the Effective Date, BBOX will remain listed on the Official List and
admitted to trading on the Main Market. The registered office of BBOX will
remain in London.
UK REIT status
Both BBOX and UKCM fall within the UK REIT regime and benefit from the tax
efficiencies provided by that regime. The Combined Group is expected to fall
within the UK REIT regime and the relevant tax measures will continue to apply
to the Combined Group.
Trading facilities
It is intended that dealings in, and registration of transfers of, UKCM Shares
(other than the registration of the transfer of the Scheme Shares to BBOX
pursuant to the Scheme) will be suspended shortly before the Effective Date at
a time to be set out in the Scheme Document. It is further intended that
applications will be made to the London Stock Exchange to cancel trading in
the UKCM Shares on the Main Market, and to the FCA to cancel the listing of
the UKCM Shares on the Official List, in each case with effect from or shortly
following the Effective Date. Further details about the de-listing and
cancellation of trading of the UKCM Shares can be found in paragraphs 16
and 17 of this Announcement.
No statements in this paragraph 10 are "post-offer undertakings" for the
purposes of Rule 19.5 of the Takeover Code.
11. Offer-related Arrangements
Confidentiality Agreements
BBOX and UKCM have entered into a mutual non-disclosure agreement dated 22
November 2023 pursuant to which each of BBOX and UKCM has undertaken, among
other things, to keep certain information relating to the Combination and the
other party confidential and not to disclose it to third parties (other than
to permitted parties) unless required by law or regulation.
BBOX and UKCM have also entered into a supplemental confidentiality agreement
dated 29 February 2024 which sets out how any confidential information that is
commercially sensitive can be disclosed, used or shared.
UKCM IMA Termination Agreement
BBOX, BBOX Manager, UKCM and UKCM Manager, amongst others, have entered into
an agreement dated 21 March 2024 concerning the termination of the UKCM IMA
and related matters (the "UKCM IMA Termination Agreement").
Pursuant to the UKCM IMA Termination Agreement, the parties have agreed the
following key terms:
· The UKCM IMA will terminate conditional upon and with effect from
the Scheme becoming Effective;
· No compensation shall be payable to the UKCM Manager under the
UKCM IMA in relation to such termination being earlier than the notice period
to terminate required under the UKCM IMA; and
· Following completion of the Combination, the UKCM Manager will
provide all books of account, records, registers, correspondence and amounts
and any necessary assistance and guidance to UKCM, BBOX (or to the BBOX
Manager on its behalf) to facilitate an orderly transition process.
In addition, the UKCM IMA Termination Agreement includes a number of
TUPE-related provisions which relate to the Employees, including:
· Undertakings from the UKCM Manager and the BBOX Manager to comply
with their respective duties under TUPE;
· Obligations of BBOX to reimburse the UKCM Manager and the BBOX
Manager respectively in relation to certain employee related payments up to
£0.7 million in aggregate; and
· Cross-indemnities from the UKCM Manager and the BBOX Manager for
pre and post-TUPE transfer employment liabilities associated with Employees
who would transfer under TUPE to the BBOX Manager.
The parties to the UKCM IMA Termination Agreement have agreed that, if the
Panel determines that any provision of the UKCM IMA Termination Agreement that
requires the parties to take or not to take action, whether as a direct
obligation or as a condition to any other person's obligation (however
expressed) prior to the date of completion of the Combination, is not
permitted by Rule 21.2 of the Takeover Code, that provision shall have no
effect and shall be disregarded.
12. Irrevocable Undertakings and Letter of Intent
The BBOX Directors have irrevocably undertaken to vote in favour of the
resolutions to be proposed at the BBOX General Meeting in respect of their own
beneficial holdings totalling 390,170 BBOX Shares, representing in aggregate
approximately 0.02 per cent. of BBOX's issued ordinary share capital on 20
March 2024 (being the last Business Day prior to the release of this
Announcement). The UKCM Recommending Directors have irrevocably undertaken to
vote in favour of the Scheme (or, if implemented by a Takeover Offer, to
accept such Takeover Offer) in respect of their own beneficial holdings
totalling 427,666 UKCM Shares, representing, in aggregate, approximately 0.03
per cent. of UKCM's issued ordinary share capital on 20 March 2024 (being the
last Business Day prior to the release of this Announcement).
In addition to the irrevocable undertakings received from the UKCM
Recommending Directors, BBOX has received an irrevocable undertaking from
Phoenix Life Limited ("Phoenix") to vote in favour of the Combination if it is
implemented by way of the Scheme or, if implemented by way of a Takeover
Offer, to accept such Takeover Offer, in respect of 563,773,465 UKCM Shares,
representing approximately 43.4 per cent. of UKCM's total issued ordinary
share capital on 20 March 2024 (being the last Business Day prior to the
release of this Announcement).
BBOX has also received a non-binding letter of intent from Investec Wealth
& Investment Limited ("Investec") to vote in favour of the Combination if
it is implemented by way of the Scheme or, if implemented by way of a Takeover
Offer, to accept such Takeover Offer, in respect of 170,000,000 UKCM Shares
representing approximately 13.1 per cent. of UKCM's total issued ordinary
share capital on 20 March 2024 (being the last Business Day prior to the
release of this Announcement).
In total, therefore, BBOX has received irrevocable undertakings and a letter
of intent representing, in aggregate, approximately 56.5 per cent. of the
issued ordinary share capital of UKCM on 20 March 2024 (being the last
Business Day prior to the release of this Announcement).
Further details of the irrevocable undertakings and letter of intent are set
out in Appendix 3 to this Announcement.
13. Dividends
UKCM Dividends
UKCM Shareholders will be entitled to receive, to the extent the Scheme Record
Time occurs after the record date in respect of, any UKCM dividend in respect
of each of the successive quarterly periods ending after 31 December 2023,
provided in each case that such dividend is payable in accordance with UKCM's
existing dividend policy, consistent with past practice in relation to the
payment of dividends, including as to time and quantum, and UKCM and BBOX have
agreed the record date for such dividend (each such dividend a "UKCM Quarterly
Permitted Dividend").
If, on or after the date of this Announcement and on or prior to the Effective
Date, UKCM announces, declares, makes or pays: (i) a UKCM Quarterly Permitted
Dividend or a UKCM Equalising Dividend (as defined below), and the quantum of
such dividend is in excess of the amount which UKCM is entitled to pay to UKCM
Shareholders in accordance with this Announcement; or (ii) any other dividend,
distribution or form of capital return, BBOX shall be entitled to either:
a) Adjust the Exchange Ratio by an amount equivalent to all or any part of
such excess (in the case of a UKCM Quarterly Permitted Dividend or a UKCM
Equalising Dividend (as relevant)) or by the amount of all or part of any such
other dividend, distribution or form of capital return, in which case
references to the Exchange Ratio will be deemed to be a reference to the
Exchange Ratio as so adjusted; or
b) Pay an equalising dividend to BBOX Shareholders so as to reflect the
value attributable to all or any part of such excess (in the case of a UKCM
Quarterly Permitted Dividend or a UKCM Equalising Dividend (as relevant)) or
the amount of all or part of any such other dividend, distribution or form of
capital return (a "BBOX Equalising Dividend"), without any consequential
change to the Exchange Ratio.
BBOX Dividends
BBOX Shareholders will be entitled to receive a dividend of 2.05 pence per
BBOX Share in respect of the quarter ended 31 December 2023, as announced on 1
March 2024, scheduled to be paid on or around 2 April 2024 (the "BBOX Q4 2023
Dividend").
In addition to the BBOX Q4 2023 Dividend, BBOX Shareholders will be entitled
to receive, to the extent the Scheme Record Time occurs after the record date
in respect of, any BBOX dividend in respect of each of the successive
quarterly periods ending after 31 December 2023, provided in each case that
such dividend is payable in accordance with BBOX's existing dividend policy,
consistent with past practice in relation to the payment of dividends,
including as to time and quantum, and BBOX and UKCM have agreed the record
date for such dividend (each such dividend a "BBOX Quarterly Permitted
Dividend").
If, on or after the date of this Announcement and on or prior to the Effective
Date, BBOX announces, declares, makes or pays: (i) the BBOX Q4 2023 Dividend,
a BBOX Quarterly Permitted Dividend or a BBOX Equalising Dividend, and the
quantum of such dividend is in excess of the amount which BBOX is entitled to
pay to BBOX Shareholders in accordance with this Announcement; or (ii) any
other dividend, distribution or form of capital return, UKCM shall be entitled
to either:
a) Adjust the Exchange Ratio by an amount equivalent to all or any part of
such excess (in the case of the BBOX Q4 2023 Dividend, a BBOX Quarterly
Permitted Dividend or a BBOX Equalising Dividend (as relevant)) or by the
amount of all or part of any such other dividend, distribution or form of
capital return, in which case references to the Exchange Ratio will be deemed
to be a reference to the Exchange Ratio as so adjusted; or
b) Pay an equalising dividend to UKCM Shareholders so as to reflect the
value attributable to all or any part of such excess (in the case of the BBOX
Q4 2023 Dividend, a BBOX Quarterly Permitted Dividend or a BBOX Equalising
Dividend (as relevant)) or the amount of all or part of any such other
dividend, distribution or form of capital return (a "UKCM Equalising
Dividend"), without any consequential change to the Exchange Ratio.
Any exercise of rights referred to in this paragraph 13 shall be the
subject of an announcement and, for the avoidance of doubt, shall not be
regarded as constituting any revision or variation of the terms of the
Combination.
Combined Group
Following the completion of the Combination, the Combined Group would continue
to pursue BBOX's strategy of delivering sustainable income and capital growth,
expected to result in attractive performance through the economic cycle that
underpins a predictable and progressive dividend. BBOX's dividend policy is
for the three quarterly dividends to each represent 25 per cent. of the
previous full year dividend. BBOX then uses the fourth quarter dividend to
determine any progression and achieve an overall pay-out ratio in excess of 90
per cent. of adjusted earnings (being the metric consistently used by BBOX).
In line with this policy, BBOX expects that for the financial year ending 31
December 2024 and based on the Exchange Ratio, UKCM Shareholders should
receive following completion of the Combination, at least the same income from
aggregate dividends in respect of the Combined Group as they received in
aggregate dividends for UKCM's financial year ended 31 December 2023, being
not less than 3.40 pence per UKCM Share, provided that there are sufficient
adjusted earnings generated during this period by the Combined Group for
dividends to be covered at this level.
The New BBOX Shares will be issued credited as fully paid-up and will rank
pari passu in all respects with the BBOX Shares in issue at that time,
including the right to receive and retain dividends and other distributions
(if any) announced, declared, made or paid by reference to a record date on or
after the Effective Date (save, for the avoidance of doubt, any BBOX Quarterly
Permitted Dividends and any BBOX Equalising Dividend). Accordingly, based on
the expected timetable for the Scheme to become Effective, Scheme Shareholders
who retain their New BBOX Shares following completion of the Combination would
receive the BBOX first quarterly interim dividend in respect of the Combined
Group for the quarterly period January to March 2024, which is expected to be
paid in May/June 2024.
14. Scheme of Arrangement
It is intended that the Combination will be effected by a Court-sanctioned
scheme of arrangement of UKCM, between UKCM and the Scheme Shareholders, under
Part VIII of the Companies Law of Guernsey, full details of which will be set
out in the Scheme Document to be published by UKCM in due course. However,
BBOX reserves the right, with the consent of the Panel and UKCM or, in certain
circumstances, without the consent of UKCM, to implement the Combination by
way of a Takeover Offer. The procedure for the Scheme involves, among other
things, an application by UKCM to the Court to sanction the Scheme, in
consideration for which Scheme Shareholders who are on the register of members
at the Scheme Record Time will receive the New BBOX Shares on the basis of the
Exchange Ratio. The purpose of the Scheme is to provide for BBOX to become the
holder of the entire issued ordinary share capital of UKCM.
The Combination will be subject to the Conditions and certain further terms
set out in Appendix 1 to this Announcement and to the full terms and
conditions which will be set out in the Scheme Document, including the
approval of the Scheme by the Scheme Shareholders, the sanction of the Scheme
by the Court and the approval of BBOX Shareholders.
To become Effective, the Scheme must be approved by a majority in number
representing 75 per cent. or more in value of votes cast by the Scheme
Shareholders (or the relevant class thereof, if applicable) who are on the
register of members of UKCM at the Scheme Voting Time and who are present and
whether in person or by proxy, at the Court Meeting. In addition, a special
resolution relating to the Combination must be passed at the UKCM General
Meeting, which requires the approval of UKCM Shareholders representing at
least 75 per cent. of the votes cast at the UKCM General Meeting (either in
person or by proxy). The UKCM General Meeting will be held immediately after
the Court Meeting.
The UKCM Meetings are to be held no later than the 22nd day after the expected
date of the UKCM Meetings to be set out in the Scheme Document in due course
(or such later date, if any, as BBOX may determine with the agreement of UKCM
or with the consent of the Panel and (if required) that the Court may allow).
Following the UKCM Meetings, the Scheme must be sanctioned by the Court no
later than the 22nd day after the expected date of the Scheme Court Hearing to
be set out in the Scheme Document in due course (or such later date, if any,
as BBOX may determine with the agreement of UKCM or with the consent of the
Panel and approval of the Court, if such approval is required). If the Court
sanctions the Scheme, the Scheme will become Effective upon the Court granting
the Scheme Court Order.
The Scheme is expected to become effective in May 2024, subject to the
satisfaction or waiver of the Conditions and certain further terms set out in
Appendix 1 to this Announcement and the full terms and conditions which will
be set out in the Scheme Document.
Upon the Scheme becoming Effective, it will be binding on all UKCM
Shareholders, irrespective of whether or not they attended or voted at the
UKCM Meetings and share certificates in respect of UKCM Shares will cease to
be valid and entitlements to UKCM Shares held within the CREST system will be
cancelled.
The Scheme Document will include full details of the Scheme, together with
notices of the Court Meeting and the UKCM General Meeting and the expected
timetable, and will specify the action to be taken by Scheme Shareholders. It
is expected that the Scheme Document, together with the Forms of Proxy, will
be published as soon as practicable and in any event within 28 days of the
date of this Announcement (or such later date as may be agreed by BBOX and
UKCM with the consent of the Panel).
The Scheme will be governed by Guernsey law and will be subject to the
jurisdiction of the Court. The Scheme will be subject to, among other things,
the applicable requirements of the Takeover Code, the Panel, the London Stock
Exchange, the Companies Law of Guernsey and the FCA.
BBOX has reserved the right to elect, subject to the consent of the Panel, for
the Combination to be implemented by way of a Takeover Offer. If the
Combination is effected by way of a Takeover Offer and such Takeover Offer
becomes or is declared unconditional in all respects and sufficient
acceptances are received, BBOX intends to: (i) request the London Stock
Exchange and the FCA cancel trading in UKCM Shares on the London Stock
Exchange's Main Market for listed securities and the listing of the UKCM
Shares from the Official List; and (ii) exercise its rights to apply the
provisions of section 337 of the Companies Law of Guernsey to acquire
compulsorily the remaining UKCM Shares in respect of which the Takeover Offer
has not been accepted.
15. BBOX Shareholder Approval
The Combination constitutes a Class 1 transaction for BBOX for the purposes of
the Listing Rules. Accordingly, BBOX will be required to seek the approval of
the BBOX Shareholders for the Combination at the BBOX General Meeting. The
Combination is conditional on, among other things, the BBOX Resolutions being
passed by the requisite majority of BBOX Shareholders at the BBOX General
Meeting (but not, for the avoidance of doubt, any other resolutions to be
proposed at the BBOX General Meeting which shall not be conditions to the
Combination).
Pursuant to the Listing Rules, BBOX is required to produce a circular in
connection with the Combination to be sent to BBOX Shareholders containing,
amongst other things, (i) the background to and reasons for the Combination
and (ii) a notice convening the BBOX General Meeting at which, amongst other
things, the BBOX Resolution will be proposed for the approval by BBOX
Shareholders. BBOX is also required to prepare a prospectus in connection with
the Admission of the New BBOX Shares. It is expected that the circular and
prospectus will be a combined circular and prospectus (the "Combined Circular
and Prospectus") and published and made available to BBOX Shareholders at or
around the same time as the Scheme Document is published and posted to UKCM
Shareholders.
16. Admission of New BBOX Shares
Applications will be made to the FCA and the London Stock Exchange for the New
BBOX Shares to be admitted to the Official List and to trading on the London
Stock Exchange's Main Market for listed securities respectively. It is
expected that Admission will become effective and that dealings for normal
settlement in the New BBOX Shares will commence on the London Stock Exchange
at 8.00 a.m. on the first Business Day following the Effective Date.
The New BBOX Shares will be issued credited as fully paid-up and will rank
pari passu in all respects with the BBOX Shares in issue at that time,
including the right to receive and retain dividends and other distributions
(if any) announced, declared, made or paid by reference to a record date on or
after the Effective Date (save, for the avoidance of doubt, any BBOX Quarterly
Permitted Dividends and any BBOX Equalising Dividend), and will be capable of
being held in both certificated and uncertificated form.
Fractions of New BBOX Shares will not be allotted or issued pursuant to the
Combination and entitlements of Scheme Shareholders will be rounded down to
the nearest whole number of New BBOX Shares. All fractional entitlements to
New BBOX Shares will be aggregated and sold in the market as soon as
practicable after the Effective Date. The net proceeds of such sale (after
deduction of all expenses and commissions incurred in connection with the
sale) will be distributed by BBOX in due proportions to Scheme Shareholders
who would otherwise have been entitled to such fractions provided that
individual entitlements to amounts of less than £5 will not be paid to Scheme
Shareholders but will be retained for the benefit of the Combined Group.
17. Delisting
It is intended that dealings in UKCM Shares should be suspended shortly prior
to the Effective Date, at a time to be set out in the Scheme Document. It is
further intended that an application will be made to the London Stock Exchange
for the cancellation of the trading of the UKCM Shares on the Main Market and
the FCA will be requested to cancel the listing of UKCM Shares on the Official
List to take effect on or shortly after the Effective Date. The last day of
dealings in UKCM Shares on the Main Market is expected to be the Business Day
immediately prior to the Effective Date and no transfers will be registered
after 6.00 p.m. on that date.
On the Effective Date, UKCM will become a wholly-owned subsidiary of BBOX and
share certificates in respect of the UKCM Shares will cease to be valid and
should be destroyed.
In addition, entitlements held within the CREST system to the UKCM Shares will
be cancelled.
18. Disclosure of Interests in UKCM
As at the close of business on 20 March 2024, (being the last Business Day
prior to the release of this Announcement), the following interests in
relevant securities of UKCM were held by or on behalf of the following persons
or entities who are deemed to be acting in concert with BBOX for the purposes
of the Combination:
(a) 64,440 UKCM Shares in aggregate are held by or on behalf of
Richard Laing (Non-Executive Director of BBOX), his close relatives and
related trusts;
(b) 52,488 UKCM Shares in aggregate are held by or on behalf of Phil
Redding (a member of the BBOX Manager), his close relatives and related
trusts;
(c) 5,377,474 UKCM Shares in aggregate are held by or on behalf of
abrdn plc and its affiliates; and
(d) As at the close of business on 20 March 2024, (being the last
Business Day prior to the release of this Announcement), save for the
irrevocable undertakings referred to in paragraph 12 above and as set out
above in this paragraph 18, neither BBOX, nor any of the BBOX Directors,
nor, so far as BBOX is aware, any person acting in concert (within the meaning
of the Takeover Code) with BBOX has:
(i) any interest in or right to subscribe for any relevant
securities of UKCM;
(ii) any short positions in respect of relevant UKCM Shares (whether
conditional or absolute and whether in the money or otherwise), including any
short position under a derivative, any agreement to sell or any delivery
obligation or right to require another person to purchase or take delivery;
(iii) borrowed or lent any relevant UKCM Shares (including, for
these purposes, any financial collateral arrangements of the kind referred to
in Note 3 on Rule 4.6 of the Takeover Code), save for any borrowed shares
which had been either on-lent or sold; or
(iv) any dealing arrangement of the kind referred to in Note 11(a) on
the definition of acting in concert in the Takeover Code in relation to UKCM
Shares or in relation to securities convertible or exchangeable into UKCM
Shares.
For these purposes:
"interests in securities" arise, in summary, when a person has a long economic
exposure, whether absolute or conditional, to changes in the price of
securities (and a person who only has a short position in securities is not
treated as interested in those securities). In particular, a person will be
treated as having an 'interest' by virtue of the ownership, voting rights or
control of securities, or by virtue of any agreement to purchase, option in
respect of, or derivative referenced to, securities; and
"relevant securities of UKCM" are UKCM Shares or securities convertible or
exchangeable into UKCM Shares.
19. Consents
Each of Jefferies, Akur, J.P. Morgan Cazenove, Rothschild & Co and
Deutsche Numis has given and not withdrawn their consent to the publication of
this Announcement with the inclusion herein of the references to their name
(and, in the case of Jefferies, its report) in the form and context in which
they appear.
Each of Jefferies and BDO has given and not withdrawn its consent to the
inclusion in this Announcement of its report on the Quantified Financial
Benefits Statement in the form and context in which it is included.
Each of CBRE and Colliers has given and not withdrawn its consent to the
publication of its property valuation report(s) in this Announcement with the
inclusion herein to the references to its name and, where applicable, report
in the form and context in which it is included.
20. Documents Available for Inspection
Copies of the following documents will, by no later than 12 noon on 22 March
2024, be published on BBOX's website at
https://www.tritaxbigbox.co.uk/investors/shareholder-information/possible-all-share-offer-for-ukcm/
and on UKCM's website at https://www.ukcpreit.com/en-gb/merger/access:
(a) this Announcement;
(b) the irrevocable undertakings and letters of intent listed in
Appendix 3 to this Announcement;
(c) the Confidentiality Agreement;
(d) the Supplemental Confidentiality Agreement;
(e) the UKCM IMA Termination Agreement;
(f) the consent letters from each of Jefferies, Akur, J.P. Morgan
Cazenove, Rothschild & Co, Deutsche Numis, BDO, CBRE and Colliers referred
to in paragraph 19 above;
(g) the BDO and Jefferies reports in respect of the Quantified
Financial Benefits Statement set out in Parts B and C of Appendix 4 of this
Announcement;
(h) the property valuation reports from each of CBRE and Colliers as
set out in Appendix 5 of this Announcement; and
(i) the no material difference letters from each of CBRE and
Colliers.
21. General
The bases and sources for certain financial information contained in this
Announcement are set out in Appendix 2 to this Announcement. A summary of the
irrevocable undertakings and the letter of intent given in relation to the
Combination is set out in Appendix 3 to this Announcement. The details of and
bases of calculation of the anticipated quantified financial benefits of the
Combination together with the various reports pursuant to Rule 28 of the
Takeover Code are set out in Appendix 4 to this Announcement. Property
valuation reports for UKCM and BBOX are set out in Appendix 5 to this
Announcement pursuant to Rule 29 of the Takeover Code. Certain terms used in
this Announcement are defined in Appendix 6 to this Announcement.
In the event that either UKCM's or BBOX's property portfolio was to be sold at
the valuations contained in the property valuation reports set out in Appendix
5 to this Announcement, any gains realised on such disposals may be subject to
taxation in the UK or, in respect of the assets located in the UK and/or (in
the case of UKCM) Guernsey. Generally, disposals by a UK REIT of assets
located in the UK held for the purpose of a property rental business should be
exempt from UK corporation tax; however, there are specific rules which can
result in assets held as part of the property rental business being subject to
tax on disposal (for example when a property is materially developed and sold
within three years of completion of that development).
For the purposes of Rule 28 of the Takeover Code, the Quantified Financial
Benefits Statement contained in this Announcement is the responsibility of
BBOX and the BBOX Directors. Part A of Appendix 4 to this Announcement sets
out the Quantified Financial Benefits Statement relating to cost savings and
synergies arising out of the Combination and provides underlying information
and bases of belief. Parts B and C of Appendix 4 include reports from BBOX's
reporting accountant, BDO, and its lead financial adviser, Jefferies, in
connection with the anticipated Quantified Financial Benefits Statement, as
required pursuant to Rule 28.1(a) of the Takeover Code, and provides
underlying information and bases for the reporting accountant's and lead
financial adviser's respective reports. Each of BDO and Jefferies has given
and not withdrawn its consent to the inclusion of its report in this
Announcement in the form and context in which it is included.
For the purposes of Rule 29.5 of the Takeover Code, the UKCM Board confirms
that CBRE has confirmed to it that an updated valuation of UKCM's property
portfolio as at the date of this Announcement would not be materially
different from the valuation given by CBRE as at 31 December 2023 and
contained in the CBRE property valuation report set out in Part A of Appendix
5 to this Announcement.
For the purposes of Rule 29.5 of the Takeover Code, the BBOX Board confirms
that CBRE has confirmed to it that an updated valuation as at the date of this
Announcement, of that part of BBOX's property portfolio valued by CBRE would
not be materially different from the valuation given by CBRE as at 31 December
2023 and contained in the CBRE property valuation report set out in Part B of
Appendix 5 to this Announcement.
For the purposes of Rule 29.5 of the Takeover Code, the BBOX Board confirms
that Colliers has confirmed to it that an updated valuation as at the date of
this Announcement, of that part of BBOX's property portfolio valued by
Colliers would not be materially different from the valuation given by
Colliers as at 31 December 2023 and contained in the Colliers property
valuation report set out in Part C of Appendix 5 to this Announcement.
BBOX reserves the right, with the consent of the Panel and UKCM or, in certain
circumstances, without the consent of UKCM, to implement the Combination by
way of a Takeover Offer for the entire issued and to be issued ordinary share
capital of UKCM not already held by BBOX as an alternative to the Scheme. In
such an event a Takeover Offer will be implemented on the same terms (subject
to appropriate amendments), so far as applicable, as those which would apply
to the Scheme and subject to the amendments referred to in Part C of Appendix
1 to this Announcement.
Further Information
This Announcement is for information purposes only and is not intended to and
does not constitute or form part of an offer, invitation or the solicitation
of an offer or invitation to purchase, or otherwise acquire, subscribe for,
sell or otherwise dispose of any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Combination or otherwise nor
shall there be any purchase, sale, issuance, exchange or transfer of
securities of BBOX or UKCM or such solicitation pursuant to the Combination in
any jurisdiction in which such offer, invitation, solicitation, purchase,
sale, issuance, exchange or transfer is unlawful. The Combination will be
implemented solely pursuant to the terms of the Scheme Document (or, in the
event that the Combination is to be implemented by means of a Takeover Offer,
the Offer Document), which together with the Forms of Proxy (or form of
acceptance, if applicable), will contain the full terms and conditions of the
Combination, including details of how to vote in respect of the Combination.
Any decision in respect of, or other response to, the Combination should be
made on the basis of the information contained in the Scheme Document and the
Combined Circular and Prospectus.
BBOX will prepare the Combined Circular and Prospectus to be distributed to
BBOX Shareholders, containing information on the New BBOX Shares and the
Combined Group. UKCM and BBOX urge UKCM Shareholders to read the Scheme
Document and the Combined Circular and Prospectus carefully when they become
available because they will contain important information in relation to the
Combination, the New BBOX Shares and the Combined Group. Any vote in respect
of resolutions to be proposed at the UKCM Meetings or the BBOX General Meeting
to approve the Combination, the Scheme or related matters, should be made only
on the basis of the information contained in the Scheme Document and the
Combined Circular and Prospectus (in the case of UKCM Shareholders) and the
Combined Circular and Prospectus (in the case of BBOX Shareholders).This
Announcement does not constitute a prospectus or prospectus equivalent
document or an exempted document.
The statements contained in this Announcement are made as at the date of this
Announcement, unless some other time is specified in relation to them, and
publication of this Announcement shall not give rise to any implication that
there has been no change in the facts set forth in this Announcement since
such date.
Neither the GFSC nor the States of Guernsey take any responsibility for the
financial soundness of UKCM or for the correctness of any of the statements
made or opinions expressed with regard to it.
Information Relating to UKCM Shareholders
Please be aware that addresses, electronic addresses and certain other
information provided by UKCM Shareholders, persons with information rights and
other relevant persons for the receipt of communications from UKCM may be
provided to BBOX during the Offer Period as required under Section 4 of
Appendix 4 of the Takeover Code.
Overseas Jurisdictions
The release, publication or distribution of this Announcement in, into or from
jurisdictions other than the United Kingdom or Guernsey may be restricted by
law and/or regulation and therefore any persons who are subject to the laws of
any jurisdiction other than the United Kingdom or Guernsey should inform
themselves about and observe any applicable legal or regulatory requirements.
In particular, the ability of persons who are not resident in the United
Kingdom or Guernsey to vote their UKCM Shares with respect to the Scheme at
the Court Meeting, or to execute and deliver Forms of Proxy appointing another
person to vote at the Court Meeting on their behalf, may be affected by the
laws of the relevant jurisdictions in which they are located. Any failure to
comply with the applicable restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent permitted by
applicable law the companies and persons involved in the Combination disclaim
any responsibility or liability for the violation of such restrictions by any
person. This Announcement has been prepared for the purpose of complying with
English law, Guernsey law and the Takeover Code and the information disclosed
may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws of jurisdictions
outside the United Kingdom or Guernsey.
Unless otherwise determined by BBOX or required by the Takeover Code, and
permitted by applicable law and regulation, the New BBOX Shares to be issued
pursuant to the Combination to UKCM Shareholders will not be made available,
directly or indirectly, in, into or from a Restricted Jurisdiction where to do
so would violate the laws in that jurisdiction and no person may vote in
favour of the Combination by any such use, means, instrumentality or form
within a Restricted Jurisdiction or any other jurisdiction if to do so would
constitute a violation of the laws of that jurisdiction. Accordingly, copies
of this Announcement and any formal documentation relating to the Combination
are not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in, into or from any Restricted Jurisdiction or
any other jurisdiction where to do so would constitute a violation of the laws
of that jurisdiction, and persons receiving such documents (including
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send such documents in, into or from any Restricted
Jurisdiction. Doing so may render invalid any related purported vote in
respect of the Combination. If the Combination is implemented by way of a
Takeover Offer (unless otherwise permitted by applicable law and regulation),
the Takeover Offer may not be made directly or indirectly, in or into, or by
the use of mails or any means or instrumentality (including, but not limited
to, facsimile, e-mail or other electronic transmission or telephone) of
interstate or foreign commerce of, or of any facility of a national, state or
other securities exchange of, any Restricted Jurisdiction and the Takeover
Offer may not be capable of acceptance by any such use, means, instrumentality
or facilities or from within any Restricted Jurisdiction.
The availability of New BBOX Shares pursuant to the Combination to UKCM
Shareholders who are not resident in the United Kingdom or Guernsey, or the
ability of those persons to hold such shares may be affected by the laws or
regulatory requirements of the relevant jurisdictions in which they are
resident. Persons who are not resident in the United Kingdom or Guernsey
should inform themselves of, and observe, any applicable legal or regulatory
requirements. UKCM Shareholders who are in doubt about such matters should
consult an appropriate independent professional adviser in the relevant
jurisdiction without delay.
Further details in relation to UKCM Shareholders in overseas jurisdictions
will be contained in the Scheme Document.
Additional Information for US Investors
The Combination relates to the shares of a Guernsey company with a listing on
the London Stock Exchange and is proposed to be implemented pursuant to a
scheme of arrangement provided for under Guernsey company law. A transaction
effected by means of a scheme of arrangement is not subject to the proxy
solicitation or tender offer rules under the US Exchange Act. Accordingly, the
Combination is subject to the procedural and disclosure requirements, rules
and practices applicable in the United Kingdom or Guernsey involving a target
company incorporated in Guernsey and listed on the London Stock Exchange,
which differ from the requirements of US proxy solicitation or tender offer
rules. Financial information included in this Announcement and the Scheme
Document has been or will be prepared in accordance with UK IFRS or EU IFRS
and thus may not be comparable to financial information of US companies or
companies whose financial statements are prepared in accordance with generally
accepted accounting principles in the United States. Generally accepted
accounting principles in the United States differ in certain significant
respects from UK IFRS and EU IFRS.
If in the future BBOX elects, with the consent of the Panel, to implement the
Combination by means of a Takeover Offer and determines to extend such
Takeover Offer into the United States, such Takeover Offer will be made in
compliance with all applicable laws and regulations, including, without
limitation, to the extent applicable, Section 14(e) of the US Exchange Act and
Regulation 14E thereunder, and subject, in the case of participation by UKCM
Shareholders resident in the United States, to the availability of an
exemption (if any) from the registration requirements of the US Securities Act
and of the securities laws of any state or other jurisdiction of the United
States. Such Takeover Offer would be made by BBOX and no one else. In addition
to any such Takeover Offer, BBOX, certain affiliated companies and the
nominees or brokers (acting as agents) may make certain purchases of, or
arrangements to purchase, shares in UKCM outside such Takeover Offer during
the period in which such Takeover Offer would remain open for acceptance. If
such purchases or arrangements to purchase were to be made, they would be made
outside the United States and would comply with applicable law, including the
US Exchange Act. Any information about such purchases will be disclosed as
required in the United Kingdom and Guernsey, will be reported to a Regulatory
Information Service of the FCA and will be available on the London Stock
Exchange website: www.londonstockexchange.com.
The New BBOX Shares have not been and will not be registered under the US
Securities Act or under the securities laws of any state or other jurisdiction
of the United States. Accordingly, the New BBOX Shares may not be offered,
sold, resold, delivered, distributed or otherwise transferred, directly or
indirectly, in or into or from the United States absent registration under the
US Securities Act or an exemption therefrom and in compliance with the
securities laws of any state or other jurisdiction of the United States. The
New BBOX Shares are expected to be issued in reliance upon the exemption from
the registration requirements of the US Securities Act provided by section
3(a)(10) thereof.
None of the securities referred to in this Announcement have been approved or
disapproved by the SEC, any state securities commission in the United States
or any other US regulatory authority, nor have such authorities passed upon or
determined the fairness or merits of such securities or the Combination or
upon the adequacy or accuracy of the information contained in this
Announcement. Any representation to the contrary is a criminal offence in the
United States.
It may be difficult for US holders of UKCM Shares to enforce their rights and
claims arising out of the US federal securities laws, since BBOX and UKCM are
organised in countries other than the United States, and some or all of their
officers and directors may be residents of, and some or all of their assets
may be located in, jurisdictions other than the United States. US holders of
UKCM Shares may have difficulty effecting service of process within the United
States upon those persons or recovering against judgments of US courts,
including judgments based upon the civil liability provisions of the US
federal securities laws. US holders of UKCM Shares may not be able to sue a
non-US company or its officers or directors in a non-US court for violations
of US securities laws. Further, it may be difficult to compel a non-US company
and its affiliates to subject themselves to a US court's judgment.
The receipt of New BBOX Shares pursuant to the Combination by a US UKCM
Shareholder may be a taxable transaction for US federal income tax purposes,
and may also be a taxable transaction under applicable state and local tax
laws, as well as foreign and other tax laws. Each UKCM Shareholder is urged to
consult its independent professional adviser immediately regarding the tax
consequences of the Combination.
Important Notices Relating to Financial Advisers
Jefferies International Limited ("Jefferies") and Akur Limited ("Akur") which
are each authorised and regulated by the FCA in the United Kingdom, are acting
exclusively for BBOX and no one else in connection with the matters set out in
this Announcement and will not be responsible to anyone other than BBOX for
providing the protections afforded to clients of Jefferies or Akur nor for
providing advice in relation to any matter referred to in this Announcement.
Neither Jefferies nor Akur nor any of their 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 Jefferies or Akur in connection with this Announcement, any
statement contained herein or otherwise.
J.P. Morgan Securities PLC, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), and which is authorised in
the United Kingdom by the Prudential Regulation Authority (the "PRA") and
regulated by the PRA and the FCA, is acting as financial adviser exclusively
for BBOX and no one else in connection with the Combination and will not
regard any other person as its client in relation to the Combination and will
not be responsible to anyone other than BBOX for providing the protections
afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for
providing advice in relation to the Combination or any other matter or
arrangement referred to in this Announcement.
N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is
authorised and regulated by the FCA in the United Kingdom, is acting
exclusively as financial adviser to UKCM and for no one else in connection
with the matters described in this Announcement and will not be responsible to
anyone other than UKCM for providing the protections afforded to clients of
Rothschild & Co nor for providing advice in connection with any matter of
this referred to herein. Neither Rothschild & Co nor any of its affiliates
(nor their respective directors, officers, employees or agents) owes or
accepts any duty, liability or responsibility whatsoever(whether director or
indirect, whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Rothschild & Co in connection with this
Announcement, any statement contained herein, the Combination or otherwise.
Numis Securities Limited (trading for these purposes as Deutsche Numis)
("Deutsche Numis"), which is authorised and regulated by the FCA in the United
Kingdom, is acting exclusively for UKCM and for no one else in connection with
the subject matter of this Announcement and will not be responsible to anyone
other than UKCM for providing the protections afforded to its clients or for
providing advice in connection with the subject matter of this Announcement.
Neither Deutsche Numis nor any of its affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct, indirect,
consequential, whether in contract, in tort, under statute or otherwise) to
any person who is not a client of Deutsche Numis in connection with this
Announcement, any statement or other matter or arrangement referred to herein
or otherwise.
Cautionary Note Regarding Forward Looking Statements
This Announcement (including information incorporated by reference into this
Announcement), oral statements regarding the Combination and other information
published by BBOX and UKCM contain certain forward looking statements with
respect to the financial condition, strategies, objectives, results of
operations and businesses of BBOX and UKCM and their respective groups and
certain plans and objectives with respect to the Combined Group. These forward
looking statements can be identified by the fact that they do not relate only
to historical or current facts. Forward looking statements are prospective in
nature and are not based on historical facts, but rather on current
expectations and projections of the management of BBOX and UKCM about future
events, and are therefore subject to risks and uncertainties which could cause
actual results to differ materially from the future results expressed or
implied by the forward looking statements. The forward looking statements
contained in this Announcement include statements relating to the expected
effects of the Combination on BBOX and UKCM, the expected timing and scope of
the Combination and other statements other than historical facts. Forward
looking statements often use words such as "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue",
"will", "may", "should", "would", "could", or other words of similar meaning.
These statements are based on assumptions and assessments made by BBOX and/or
UKCM in light of their experience and their perception of historical trends,
current conditions, future developments and other factors they believe
appropriate. By their nature, forward looking statements involve risk and
uncertainty, because they relate to events and depend on circumstances that
are expected to occur in the future and the factors described in the context
of such forward looking statements in this Announcement could cause actual
results and developments to differ materially from those expressed in or
implied by such forward looking statements. Although it is believed that the
expectations reflected in such forward looking statements are reasonable, no
assurance can be given that such expectations will prove to have been correct
and readers are therefore cautioned not to place undue reliance on these
forward looking statements.
There are several factors which could cause actual results to differ
materially from those expressed or implied in forward looking statements.
Among the factors that could cause actual results to differ materially from
those described in the forward looking statements are changes in global,
political, economic, business and/or competitive conditions, market and
regulatory forces, future exchange and interest rates, changes in tax rates
and future business combinations or dispositions.
Each forward looking statement speaks only as at the date of this
Announcement. Neither BBOX nor UKCM, nor their respective groups assumes any
obligation to update or correct the information contained in this Announcement
(whether as a result of new information, future events or otherwise), except
as required by applicable law or by the rules of any competent regulatory
authority.
No Profit Forecasts or Estimates
No statement in this Announcement (including any statement of estimated
synergies) is intended as a profit forecast or estimate for any period and no
statement in this Announcement should be interpreted to mean that earnings or
earnings per share or dividend per share for BBOX, UKCM or the Combined Group,
as appropriate, for the current or future financial periods would necessarily
match or exceed the historical published earnings or earnings per share or
dividend per share for BBOX, UKCM or the Combined Group as appropriate.
Quantified Financial Benefits Statement
The statements in the Quantified Financial Benefits Statement relate to future
actions and circumstances which, by their nature, involve risks, uncertainties
and contingencies. The synergies and cost savings referred to may not be
achieved, or may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. For the purposes of Rule
28 of the Takeover Code, the Quantified Financial Benefits Statement contained
in this Announcement is the responsibility of BBOX and the BBOX Directors.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in one
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 10th
Business Day (as defined in the Takeover Code) following the commencement of
the Offer Period and, if appropriate, by no later than 3.30 p.m. (London time)
on the 10th Business Day (as defined in the Takeover Code) 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 Takeover Code, any person who is, or becomes,
interested in one 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. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be
made by no later than 3.30 p.m. (London time) on the Business Day (as defined
in the Takeover Code) 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.
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). 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 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.
Rounding
Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.
Publication on Website and Availability of Hard Copies
A copy of this Announcement and the documents required to be published
pursuant to Rules 26.1 and 26.2 of the Takeover Code will be available,
subject to certain restrictions relating to persons resident in Restricted
Jurisdictions, for inspection on BBOX's website at
https://www.tritaxbigbox.co.uk/investors/shareholder-information/possible-all-share-offer-for-ukcm/
and on UKCM's website at https://www.ukcpreit.com/en-gb/merger/access by no
later than 12 noon (London time) on the Business Day following this
Announcement. For the avoidance of doubt, the contents of the websites
referred to in this Announcement are not incorporated into and do not form
part of this Announcement.
In accordance with Rule 30.3 of the Takeover Code, UKCM Shareholders and
persons with information rights may request a hard copy of this Announcement
by contacting UKCM's registrars, Computershare Investor Services (Guernsey)
Limited, c/o 13 Castle Street, St Helier, Jersey JE1 1ES or by calling
Computershare Investor Services (Guernsey) Limited on +0370 707 4040. Calls
are charged at the standard geographical rate and will vary by provider. Calls
outside the United Kingdom will be charged at the applicable international
rate. Lines are open between 8.30 a.m. to 5.30 p.m. (London time), Monday to
Friday (except public holidays in England and Wales). Please note that
Computershare Investor Services (Guernsey) Limited cannot provide any
financial, legal or tax advice. Calls may be recorded and monitored for
security and training purposes. For persons who receive a copy of this
Announcement in electronic form or via a website notification, a hard copy of
this Announcement will not be sent unless so requested. Such persons may also
request that all future documents, announcements and information to be sent to
them in relation to the Combination should be in hard copy form.
If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom
or, if not, from another appropriately authorised independent financial
adviser.
appendix 1
CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE COMBINATION
Part A: Conditions of the Combination
1. Long Stop Date
The Combination will be conditional upon the Scheme becoming unconditional and
becoming Effective, subject to the provisions of the Takeover Code, by no
later than 11.59 p.m. on the Long Stop Date.
2. Scheme approval
The Scheme will be conditional upon:
(a)
(i) its approval by a majority in number representing 75 per cent.
or more in value of votes cast by the Scheme Shareholders (or the relevant
class or classes thereof, if applicable) who are on the register of members of
UKCM at the Scheme Voting Record Time and who are present and vote, whether in
person or by proxy, at the Court Meeting and at any separate class meeting
which may be required by the Court or, in each case, at any adjournment or
postponement of any such meeting; and
(ii) the Court Meeting and any separate class meeting which may be
required by the Court, or any adjournment or postponement of any such meeting,
being held on or before the 22nd day after the expected date of the Court
Meeting to be set out in the Scheme Document (or such later date, if any, as
BBOX may determine with the agreement of UKCM or with the consent of the Panel
and (if required) that the Court may allow);
(b)
(i) all resolutions in connection with, or necessary to approve
and implement the Scheme, as set out in the notice of the UKCM General
Meeting, being duly passed by the requisite majority or majorities of UKCM
Shareholders at the UKCM General Meeting or at any adjournment or postponement
of that meeting; and
(ii) the UKCM General Meeting (or any adjournment or postponement of
that meeting) being held on or before the 22nd day after the expected date of
the UKCM General Meeting to be set out in the Scheme Document (or such later
date, if any, as BBOX may determine with the agreement of UKCM or with the
consent of the Panel and (if required) that the Court may allow); and
(c)
(i) the sanction of the Scheme by the Court with or without
modification (but subject to any such modification being on terms acceptable
to BBOX and UKCM); and
(ii) the Scheme Court Hearing being held on or before the 22nd day
after the expected date of the Scheme Court Hearing to be set out either (X)
in the Scheme Document (or such later date, if any, as BBOX may determine with
the agreement of UKCM or with the consent of the Panel and (if required) that
the Court may allow); or (Y) in the event that such expected date remains
unknown at the time of publication of the Scheme Document and the Scheme
Document identifies any date as indicative only, in any update announcement
issued through a Regulatory Information Service pursuant to paragraph 6(a) of
Appendix 7 of the Takeover Code (or such later date (if any) as may be agreed
by BBOX and UKCM, with the consent of the Panel and (if required) that the
Court may allow).
3. General conditions
In addition, subject to: (i) the terms of Part B of this Appendix 1; and (ii)
the requirements of the Panel, BBOX and UKCM have agreed that the Combination
will be conditional on the following Conditions having been satisfied or,
where applicable, waived and accordingly the necessary actions to make the
Scheme Effective will not be taken unless the following Conditions (as amended
if appropriate) have been so satisfied or, where relevant, waived prior to the
Scheme being sanctioned by the Court:
(a) BBOX Shareholder approval
The passing at the BBOX General Meeting (or at any adjournment or postponement
thereof) by the requisite majority or majorities of BBOX Shareholders of such
resolution or resolutions as are necessary to approve, implement and effect
the Combination and the acquisition of any UKCM Shares including a resolution
or resolutions to authorise the allotment of New BBOX Shares pursuant to the
Combination and to approve the Combination in accordance with Class 1
requirements under Listing Rule 10.5.1R(2) (as such resolutions shall be set
out in the notice of the BBOX General Meeting to be included in the Combined
Circular and Prospectus);
(b) Admission to listing
The FCA having acknowledged to BBOX or its agent (and such acknowledgement not
having been withdrawn) that the application for the admission of the New BBOX
Shares to the Official List with a premium listing has been approved and
(after satisfaction of any conditions to which such approval is expressed to
be subject ("Listing Conditions")) that admission will become effective as
soon as a dealing notice has been issued by the FCA and any Listing Conditions
having been satisfied;
(c) Admission to trading
The London Stock Exchange having acknowledged to BBOX or its agent (and such
acknowledgement not having been withdrawn) that the New BBOX Shares will be
admitted to trading on the Main Market;
(d) Third Party clearances
Other consents or clearances
(i) No government or governmental, quasi-governmental,
supranational, statutory, regulatory, environmental or investigative body,
court, trade agency, association, institution or any other body or person
whatsoever in any relevant jurisdiction (each a "Third Party") having given
notice of a decision to take, institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference (and, in each case, not
having withdrawn the same), or having enacted, made or proposed any statute,
regulation, decision, order or change to published practice or having taken
any other steps (and, in each case, not having withdrawn the same) and there
not continuing to be outstanding any statute, regulation, decision or order,
which in each case would or might reasonably be expected to:
(A) require, prevent or materially delay the divestiture, or
materially alter the terms envisaged for any proposed divestiture by any
member of the Wider BBOX Group or by any member of the Wider UKCM Group of all
or any part of their respective businesses, assets or property, or impose any
limitation on the ability of any of them to conduct their respective
businesses (or any of them) or to own, control or manage any of their
respective assets or properties or any part thereof which, in any such case,
is material in the context of the Wider BBOX Group or the Wider UKCM Group, in
either case taken as a whole or in the context of the Combination;
(B) require, prevent or materially delay the divestiture by any
member of the Wider BBOX Group of any shares or other securities in any member
of the Wider UKCM Group;
(C) impose any material limitation on, or result in a material delay
in, the ability of any member of the Wider BBOX Group directly or indirectly
to acquire or to hold or to exercise effectively any rights of ownership in
respect of shares or loans or securities convertible into shares or any other
securities (or the equivalent) in any member of the Wider UKCM Group or the
Wider BBOX Group or on the ability of any member of the Wider UKCM Group or
any member of the Wider BBOX Group, directly or indirectly, to hold or to
exercise effectively all or any rights of ownership in respect of shares or
loans or securities convertible into shares or any other securities (or the
equivalent) in, or to exercise voting or management control over, any such
member;
(D) otherwise adversely affect the business, assets, profits or
prospects of any member of the Wider BBOX Group or of any member of the Wider
UKCM Group to an extent which is material in the context of the Wider BBOX
Group or the Wider UKCM Group, in either case taken as a whole or in the
context of the Combination;
(E) make the Combination or its implementation or the acquisition or
proposed acquisition by BBOX or any member of the Wider BBOX Group of any
shares or other securities in, or control of, UKCM void, illegal, and/or
unenforceable under the laws of any relevant jurisdiction, or otherwise,
directly or indirectly, restrain, restrict, prohibit, materially delay or
otherwise interfere with the implementation of the same, or impose additional
conditions or obligations with respect thereto, or otherwise challenge or
interfere with the Combination, or require material amendment to the terms of
the Combination to an extent which is or could be material in the context of
the Combined Group taken as a whole or in the context of the Combination;
(F) save as envisaged in the implementation of the Combination or by
Part XVIII of the Companies Law of Guernsey, require any member of the Wider
BBOX Group or the Wider UKCM Group to acquire, or to offer to acquire, any
shares or other securities (or the equivalent) in, or any interest in any of
the assets owned by, any member of the Wider UKCM Group or any member of the
Wider BBOX Group owned by any third party, or to sell, or to offer to sell,
any shares or other securities (or their equivalent) in, or any interest in
any of the assets owned by, any member of the Wider UKCM Group or the Wider
BBOX Group;
(G) impose any limitation on the ability of any member of the Wider
UKCM Group or the Wider BBOX Group to integrate or co-ordinate its business,
or any part of it, with the businesses of any other member of the Wider UKCM
Group or the Wider BBOX Group which is adverse to and material in the context
of the Wider UKCM Group or the Wider BBOX Group, in each case taken as a
whole, or in the context of the Combination; or
(H) result in any member of the Wider UKCM Group or the Wider BBOX
Group ceasing to be able to carry on business under any name under which it
presently carries on business,
and all applicable waiting and other time periods (including any extensions
thereof) during which any such Third Party could institute, implement or
threaten any such action, proceeding, suit, investigation, enquiry or
reference or take any other step under the laws of any relevant jurisdiction
in respect of the Combination or the acquisition or proposed acquisition of
any UKCM Shares having expired, lapsed or been terminated;
(ii) All necessary notifications, filings or applications which are
deemed necessary by BBOX or any member of the Wider BBOX Group having been
made, all necessary waiting and other time periods (including any extensions
of such waiting and other time periods) under any applicable legislation or
regulation of any relevant jurisdiction having expired, lapsed or been
terminated (as appropriate) and all statutory or regulatory obligations in any
relevant jurisdiction having been complied with, in each case in connection
with the Combination or the acquisition by any member of the Wider BBOX Group
of any shares or other securities (or the equivalent) in, or control of, any
member of the Wider UKCM Group; and
(iii) All authorisations, orders, recognitions, grants,
determinations, exemptions, consents, licences, confirmations, clearances,
permissions and approvals deemed necessary by BBOX in any relevant
jurisdiction or any member of the Wider BBOX Group for or in respect of the
Combination including, without limitation, its implementation and financing or
the proposed direct or indirect acquisition of any shares or other securities
(or the equivalent) in, or control of, UKCM by any member of the Wider BBOX
Group having been obtained in terms and in a form reasonably satisfactory to
BBOX from all appropriate Third Parties or persons with whom any member of the
Wider UKCM Group has entered into contractual arrangements and all such
authorisations, orders, recognitions, grants, determinations, exemptions,
consents, licences, confirmations, clearances, permissions and approvals
deemed necessary by BBOX to carry on the business of any member of the Wider
UKCM Group which, in each case is material in the context of the Wider BBOX
Group or the Wider UKCM Group as a whole or for or in respect of the
Combination including, without limitation, its implementation or financing,
remaining in full force and effect and all filings necessary for such purpose
having been made and there being no notice or intimation of any intention to
revoke or not to renew any of the same at the time at which the Combination
becomes otherwise unconditional;
(e) Certain matters arising as a result of any arrangement,
agreement etc.
Save as Disclosed, there being no provision of any agreement, arrangement,
licence, permit or other instrument to which any member of the Wider UKCM
Group is a party or by or to which any such member or any of its assets may be
bound, entitled or subject, or any circumstance which in consequence of the
Combination or the proposed acquisition of any shares or other securities (or
equivalent) in UKCM or because of a change in the control or management of
UKCM or otherwise, would or might reasonably be expected to result in (in each
case to an extent which is material and adverse in the context of the Wider
UKCM Group as a whole, or in the context of the Combination):
(i) any monies borrowed by, or any other indebtedness or
liabilities (actual or contingent) of, or grant available to any member of the
Wider UKCM Group, being or becoming repayable or capable of being declared
repayable immediately or earlier than their or its stated maturity date or
repayment date, or the ability of any such member to borrow monies or incur
any indebtedness being withdrawn or inhibited, or being capable of becoming or
being withdrawn or inhibited;
(ii) any such agreement, arrangement, licence, permit or instrument
or the rights, liabilities, obligations or interests of any member of the
Wider UKCM Group thereunder being terminated or adversely modified or affected
or any adverse obligation or liability arising or any action being taken or
arising thereunder;
(iii) any assets or interests of any member of the Wider UKCM Group
being or falling to be disposed of or charged or ceasing to be available to
any such member of the Wider UKCM Group or any right arising under which any
such asset or interest could be required to be disposed of or charged or could
cease to be available to any member of the Wider UKCM Group otherwise than in
the ordinary course of business;
(iv) the creation (other than in the ordinary course of business) or
enforcement of any mortgage, charge or other security interest over the whole
or any part of the business, property, assets or interest of any member of the
Wider UKCM Group or any such mortgage, charge or other security interest
(whenever arising or having arisen) becoming enforceable;
(v) the rights, liabilities, obligations or interests of any member
of the Wider UKCM Group in, or the business of any such member with, any
person, firm, company or body (or any arrangement or arrangements relating to
any such interest or business) being terminated, adversely modified or
adversely affected (other than as directed, requested and/or required by BBOX
or any other member of the Wider BBOX Group);
(vi) the value of any member of the Wider UKCM Group or its financial
or trading position, prospects or profits being prejudiced or adversely
affected;
(vii) any such member ceasing to be able to carry on business under
any name under which it presently does so; or
(viii) the creation or acceleration of any liability, actual or
contingent, by any member of the Wider UKCM Group (including any material tax
liability or any obligation to obtain or acquire any material authorisation,
order, grant, recognition, determination, confirmation, consent, licence,
clearance, permission, exemption, approval, notice, waiver, concession,
agreement or exemption from any Third Party or any person) other than trade
creditors or other liabilities incurred in the ordinary course of business or
in connection with the Combination,
and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
Wider UKCM Group is a party or by or to which any such member or any of its
assets may be bound, entitled or subject, would or might reasonably be
expected to result in any of the events or circumstances as are referred to in
sub-paragraphs (i) to (viii) of this Condition;
(f) Certain events occurring since 31 December 2023
Save as Disclosed, no member of the Wider UKCM Group having, since 31 December
2023:
(i) save as between UKCM and wholly-owned subsidiaries and
subsidiary undertakings of UKCM or between such wholly-owned subsidiaries and
subsidiary undertakings of UKCM, issued or agreed to issue, authorised or
proposed the issue of securities convertible into shares of any class (or the
equivalent) or rights, warrants or options to subscribe for, or acquire, any
such shares or convertible securities (or the equivalent);
(ii) save as between UKCM and wholly-owned subsidiaries and
subsidiary undertakings of UKCM or between such wholly-owned subsidiaries and
subsidiary undertakings of UKCM and save for the UKCM Permitted Dividends,
recommended, declared, paid or made or proposed to recommend, declare, pay or
make any bonus issue, dividend or other distribution whether payable in cash
or otherwise;
(iii) save for intra-UKCM Group transactions, merged or demerged
with any body corporate or acquired or disposed of or transferred, mortgaged
or charged or created any security interest over any assets or any right,
title or interest in any asset (including shares and trade investments) or
authorised or proposed or announced any intention to propose any merger,
demerger, acquisition or disposal, transfer, mortgage, charge or security
interest, in each case, other than in the ordinary course of business and, in
each case, to the extent which is material in the context of the Wider UKCM
Group taken as a whole or in the context of the Combination;
(iv) save for intra-UKCM Group transactions, made, authorised,
proposed or announced an intention to make, propose or authorise any change in
its loan capital in each case, to the extent which is material in the context
of the Wider UKCM Group taken as a whole or in the context of the Combination;
(v) issued, authorised, proposed or announced its intention to
issue, or made any change in or to, any debentures or (save for intra-UKCM
Group transactions), save in the ordinary course of business, incurred or
increased any indebtedness or become subject to any guarantee or actual or
contingent liability;
(vi) purchased, redeemed, repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities (or the
equivalent) or reduced or, save in respect to the matters mentioned in
sub-paragraph (i) above, made any other change to any part of its share
capital in each case, to the extent which is material in the context of the
Wider UKCM Group taken as a whole or in the context of the Combination;
(vii) save for intra-UKCM Group transactions and other than pursuant
to the Combination, implemented, or authorised, proposed or announced its
intention to implement, any reconstruction, amalgamation, scheme, commitment
or other transaction or arrangement other than in the ordinary course of
business;
(viii) entered into, or materially varied the terms of, or made an offer
(which remains open for acceptance) to materially vary the terms of any
contract, service agreement, letter of appointment or arrangement with any
director or senior personnel of any member of the Wider UKCM Group;
(ix) entered into or varied or authorised, proposed or announced its
intention to enter into or vary any contract, transaction or commitment
(whether in respect of capital expenditure or otherwise) which is of a long
term, onerous or unusual nature or magnitude or which is or could reasonably
be expected to be restrictive on the businesses of any member of the Wider
UKCM Group or the Wider BBOX Group or which involves or could involve an
obligation of such a nature or magnitude other than in the ordinary course of
business and which is material or would be reasonably likely to be material in
the context of the Wider UKCM Group taken as a whole or in the context of the
Combination;
(x) (other than in respect of a member which is dormant and was
solvent at the relevant time) taken any corporate action or steps or had any
legal proceedings started or threatened against it in relation to the
suspension of payments, a moratorium of any indebtedness its winding up,
dissolution or reorganisation or for the appointment of a receiver,
administrative receiver, administrator, manager, trustee or similar officer of
all or any part of its assets or revenues or any analogous proceedings in any
jurisdiction or appointed any analogous person in any jurisdiction or had any
such person appointed in each case, to the extent which is material in the
context of the Wider UKCM Group taken as a whole or in the context of the
Combination;
(xi) been unable, or admitted in writing that it is unable, to pay its
debts or commenced negotiations with one or more of its creditors with a view
to rescheduling or restructuring any of its indebtedness, or having stopped or
suspended (or threatened to stop or suspend) payment of its debts generally or
ceased or threatened to cease carrying on all or a substantial part of its
business;
(xii) waived or compromised any claim otherwise than in the ordinary
course of business and in any case which is material or would be reasonably
likely to be material in the context of the Wider UKCM Group taken as a whole
or in the context of the Combination;
(xiii) entered into any contract, commitment, arrangement or agreement
other than in the ordinary course of business or passed any resolution or made
any offer (which remains open for acceptance) with respect to or announced any
intention to, or to propose to, effect any of the transactions, matters or
events referred to in this Condition;
(xiv) undertaken:
(A) a conversion under Part V of the Companies Law of Guernsey;
(B) an amalgamation under Part VI of the Companies Law of Guernsey;
(C) a migration under Part VII of the Companies Law of Guernsey; or
(D) an arrangement or reconstruction (other than the Scheme) under
Part VIII of the Companies Law of Guernsey;
(xv) having made any material alteration to its articles of
incorporation or other incorporation documents (in each case, other than as
required in connection with the Combination or the Scheme);
(xvi) put in place any pension schemes for any director of any member of
the Wider UKCM Group or their dependants;
(xvii) proposed or agreed to provide any share option incentive scheme or
other benefit relating to the employment or termination of employment of any
director of any member of the Wider UKCM Group;
(xviii) entered into, implemented or authorised the entry into, any joint
venture, asset or profit sharing arrangement, partnership or merger of
business or corporate entities; or
(xix) except with the consent of BBOX, having taken (or agreed or
proposed to take) any action which requires, or would require, the consent of
the Panel or the approval of UKCM Shareholders in general meeting in
accordance with, or as contemplated by, Rule 21.1 of the Takeover Code;
(g) No adverse change, litigation or regulatory enquiry
Save as Disclosed, since 31 December 2023:
(i) no adverse change or deterioration having occurred in the
business, assets, financial or trading position or profits or prospects or
operational performance of any member of the Wider UKCM Group or the Wider
BBOX Group which, in any such case, is material in the context of the Wider
UKCM Group or the Wider BBOX Group taken as a whole or in the context of the
Combination and no circumstances have arisen which would or might reasonably
be expected to result in any such adverse change;
(ii) no litigation, arbitration proceedings, prosecution or other
legal proceedings to which any member of the Wider UKCM Group or the Wider
BBOX Group is or may become a party (whether as a plaintiff, defendant or
otherwise) and no enquiry, review or investigation by, or complaint or
reference to, any Third Party or other investigative body against or in
respect of any member of the Wider UKCM Group or the Wider BBOX Group having
been instituted, announced, implemented or threatened by or against or
remaining outstanding in respect of any member of the Wider UKCM Group or the
Wider BBOX Group which in any such case, has had or might reasonably be
expected to have an adverse effect to an extent which is material in the
context of the Wider UKCM Group or the Wider BBOX Group taken as a whole or in
the context of the Combination;
(iii) no member of the Wider UKCM Group nor any member of the Wider
BBOX Group having conducted its business in breach of any applicable laws and
regulations and which is material in the context of the Wider UKCM Group or
the Wider BBOX Group taken as a whole or in the context of the Combination;
and
(iv) no contingent or other liability having arisen or become apparent
to BBOX or UKCM (other than in the ordinary course of business) which will or
might be reasonably likely to adversely affect the business, assets, financial
or trading position or profits or prospects or operational performance of any
member of the Wider UKCM Group or the Wider BBOX Group to an extent which is
material in the context of the Wider UKCM Group or the Wider BBOX Group taken
as a whole or in the context of the Combination;
(h) No withdrawal, cancellation, termination or modification of
licence
No steps having been taken which are likely to result in the withdrawal,
cancellation, termination or modification of any licence or permit held by any
member of the Wider UKCM Group which is necessary for the proper carrying on
of its business and the withdrawal, cancellation, termination or modification
of which has had, or would be reasonably expected to have, an adverse effect
which is material in the context of the Wider UKCM Group taken as a whole or
in the context of the Combination;
(i) No discovery of certain matters regarding information,
liabilities and environmental issues
(i) Save as Disclosed, BBOX not having discovered:
(A) that any financial, business or other information concerning the
Wider UKCM Group publicly disclosed at any time by or on behalf of any member
of the Wider UKCM Group before or on the date of this Announcement is
materially misleading, contains a material misrepresentation of fact or omits
to state a fact necessary to make that information not misleading, in each
case, to the extent which is material in the context of the Wider UKCM Group
taken as a whole or in the context of the Combination;
(B) that any member of the Wider UKCM Group is subject to any
liability (contingent or otherwise), in each case, to the extent which is
material in the context of the Wider UKCM Group taken as a whole or in the
context of the Combination; or
(C) any information which affects the import of any information
disclosed at any time by or on behalf of any member of the Wider UKCM Group
and which is material in the context of the Wider UKCM Group taken as a whole
or in the context of the Combination;
(ii) Save as Disclosed, BBOX not having discovered:
(A) that any past or present member of the Wider UKCM Group has
failed to comply with any and/or all applicable legislation or regulation of
any jurisdiction with regard to the use, treatment, handling, storage,
carriage, release, disposal, discharge, spillage, leak or emission of any
waste or hazardous substance or any substance likely to impair the environment
or harm human health or animal health, or otherwise relating to environmental
matters or the health and safety of any person, or that there has otherwise
been any such use, treatment, handling, storage, transport, release, disposal,
discharge, spillage, leak or emission (whether or not this constituted a
non‑compliance by any person with any such legislation or regulations and
wherever the same may have taken place) which non-compliance or use,
treatment, handling, storage, transport, release, disposal, discharge,
spillage, leak or emission, in any case, would be reasonably likely to give
rise to any liability (whether actual or contingent) or cost on the part of
any member of the Wider UKCM Group and which is material in the context of the
Wider UKCM Group taken as a whole or in the context of the Combination; or
(B) that there is, or is reasonably likely to be, for any reason
whatsoever, any liability, whether actual or contingent, of any past or
present member of the Wider UKCM Group to make good, remediate, repair,
reinstate or clean up any property or any controlled waters now or previously
owned, occupied, operated or made use of or controlled by any such past or
present member of the Wider UKCM Group or (or on its behalf) or by any person
for which a member of the Wider UKCM Group is or has been responsible, or in
which any such member may have or previously have had or be deemed to have had
an interest, under any environmental legislation, regulation, notice,
circular, order or other lawful requirement of any relevant authority or Third
Party or otherwise which is in each case material in the context of the Wider
UKCM Group taken as a whole or in the context of the Combination;
(j) Anti-corruption, sanctions and criminal property
Except as Disclosed, BBOX not having discovered that:
(i) any past or present member, director, officer or employee of
the Wider UKCM Group is or has at any time engaged in any activity, practice
or conduct which would constitute an offence under the Bribery Act 2010, the
US Foreign Corrupt Practices Act of 1977, the Prevention of Corruption
(Bailiwick of Guernsey) Law, 2003 or any other anti-corruption or anti-bribery
law, rule or regulation applicable to the Wider UKCM Group or any other law,
rule, or regulation concerning improper payments or kickbacks applicable to
the Wider UKCM Group; or (b) any person that performs or has performed
services for or on behalf of the Wider UKCM Group is or has at any time
engaged in any activity, practice or conduct in connection with the
performance of such services which would constitute an offence under the
Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977, the Prevention
of Corruption (Bailiwick of Guernsey) Law, 2003 or any other anti-corruption
legislation or anti-bribery law, rule or regulation or any other law, rule, or
regulation concerning improper payments or kickbacks that is, in each case,
applicable to the Wider UKCM Group; or
(ii) any asset of any member of the Wider UKCM Group constitutes
criminal property as defined by section 340(3) of the Proceeds of Crime Act
2002 (but disregarding paragraph (b) of that definition) or proceeds of crime
under any other applicable law, rule, or regulation concerning money
laundering or proceeds of crime or any member of the UKCM Group is found to
have engaged in activities constituting money laundering under any applicable
law, rule, or regulation concerning money laundering; or
(iii) any past or present member, director, officer or employee of
the UKCM Group , or any other person for whom any such person may be liable or
responsible; or
(iv) is or has engaged in any conduct which would violate applicable
economic sanctions or dealt with, made any investments in, made any funds or
assets available to or received any funds or assets from: (a) any government,
entity or individual in respect of which US, UK or European Union persons, or
persons operating in those territories, are prohibited from engaging in
activities or doing business, or from receiving or making available funds or
economic resources, by US, UK or European Union laws or regulations, including
the economic sanctions administered by the United States Office of Foreign
Assets Control, or HMRC; or (b) any government, entity or individual targeted
by any of the economic sanctions of the United Nations, the United States, the
United Kingdom, the European Union or any of its member states, save that this
shall not apply if and to the extent that it is or would be unenforceable by
breach of any applicable Blocking Law; or
(v) any past or present member, director, officer or employee of the
Wider UKCM Group or any other person for whom any such person may be liable or
responsible:
(A) has engaged in conduct which would violate any relevant
anti-terrorism laws, rules, or regulations, including but not limited to the
U.S. Anti-Terrorism Act;
(B) has engaged in conduct which would violate any relevant
anti-boycott law, rule, or regulation or any applicable export controls,
including but not limited to the Export Administration Regulations
administered and enforced by the U.S. Department of Commerce or the
International Traffic in Arms Regulations administered and enforced by the
U.S. Department of State;
(C) has engaged in conduct which would violate any relevant laws,
rules, or regulations concerning human rights, including but not limited to
any law, rule, or regulation concerning false imprisonment, torture or other
cruel and unusual punishment, or child labour; or
(D) is debarred or otherwise rendered ineligible to bid for or to
perform contracts for or with any government, governmental instrumentality, or
international organisation or found to have violated any applicable law, rule,
or regulation concerning government contracting or public procurement; or
(vi) any member of the Wider UKCM Group has engaged in any transaction
which would cause BBOX to be in breach of any applicable law or regulation
upon its acquisition of UKCM, including the economic sanctions of the United
States Office of Foreign Assets Control, or HMRC, or any government, entity or
individual targeted by any of the economic sanctions of the United Nations,
the United States, the United Kingdom, the European Union or any of its member
states.
Part B: Waiver and Invocation of the Conditions
1. To the extent permitted by law and subject to the
requirements of the Panel in accordance with the Takeover Code:
(a) BBOX reserves the right, in its sole discretion, to waive:
(i) any of the deadlines set out in paragraph 2 of Part A for
the timing of the Court Meeting, UKCM General Meeting and the Scheme Court
Hearing. If any such deadline is not met, BBOX shall make an announcement by
8.00 a.m. (London time) on the Business Day following such deadline confirming
whether it has invoked or waived the relevant Condition or agreed with UKCM to
extend the deadline in relation to the relevant Condition; and
(ii) in whole or in part, all or any of the Conditions set out in
Part A, except for Conditions 1, 2(a)(i), 2(b)(i), 2(c)(i)and 3(a) to (c)
(inclusive) which cannot be waived, and in respect of Condition 3 (g), so far
as it relates to the Wider UKCM Group, or any part thereof; and
(b) UKCM reserves the right, in its sole discretion, to waive, in
whole or in part, Condition 3 (g), so far as it relates to the Wider BBOX
Group, or any part thereof.
2. Conditions 2(a), 2(b) and 3 (a) to (c) (inclusive) must
be fulfilled by, and Conditions 3 (d) to (j) (inclusive) must be fulfilled or
waived by, no later than 11.59 p.m. (London time) on the date immediately
preceding the date of the Scheme Court Hearing (or such later date as BBOX,
UKCM, the Panel and, if required, the Court may allow), failing which the
Scheme will lapse. Neither BBOX nor UKCM shall be under any obligation to
waive (if capable of waiver), to determine to be or remain satisfied or
fulfilled, or treat as satisfied or fulfilled any of the Conditions capable of
waiver by a date earlier than the latest date specified for the fulfilment or
waiver thereof, notwithstanding that the other Conditions of the Combination
may, at such earlier date, have been waived or fulfilled and that there are,
at such earlier date, no circumstances indicating that any of such Conditions
may not be capable of satisfaction or fulfilment.
3. Under Rule 13.5(a) of the Takeover Code, BBOX may only
invoke a Condition so as to cause the Combination not to proceed, to lapse or
to be withdrawn with the consent of the Panel. The Panel will normally only
give its consent if the circumstances which give rise to the right to invoke
the Combination are of material significance to BBOX in the context of the
Combination. This will be judged by reference to the facts of each case at the
time that the relevant circumstances arise. Any Condition that is subject to
Rule 13.5(a) of the Takeover Code may be waived by BBOX.
4. Conditions 1, 2 and 3(a) to (c) (inclusive) and, if
applicable, any acceptance condition if the Combination is implemented by
means of a Takeover Offer, are not subject to Rule 13.5(a) of the Takeover
Code.
5. Under Rule 13.6 of the Takeover Code, UKCM may only
invoke a Condition so as to cause the Combination not to proceed, to lapse or
to be withdrawn if the circumstances which give rise to the right to invoke
the Condition are of material significance to UKCM Shareholders in the context
of the Combination.
6. The Combination will lapse if the Scheme does not become
Effective by no later than 11.59 p.m. (London time) on the Long Stop Date.
Part C: Implementation by way of Takeover Offer
1. If BBOX is required by the Panel to make a Takeover Offer
for UKCM Shares under the provisions of Rule 9 of the Takeover Code, BBOX may
make such alterations to any of the above Conditions and terms of the
Combination as are necessary to comply with the provisions of that Rule.
2. BBOX reserves the right to elect (with the consent of the
Panel), to implement the Combination by way of a Takeover Offer as an
alternative to the Scheme. In such event, the Takeover Offer will be
implemented on the same terms and conditions (subject to appropriate
amendments, to reflect the change in method of effecting the Combination,
including (without limitation) an acceptance condition set at 90 per cent. of
the issued share capital of UKCM (or such lower percentage (being more than 50
per cent.) of the issued share capital of UKCM as BBOX may, subject to the
rules of the Takeover Code and with the consent of the Panel, decide) as those
which would apply to the Scheme. Further, if sufficient acceptances of such
Takeover Offer are received and/or sufficient UKCM Shares are otherwise
acquired, it is the intention of BBOX to apply the provisions of Part XVIII of
the Companies Law of Guernsey to compulsorily acquire any outstanding UKCM
Shares to which such Takeover Offer relates.
Part D: Certain further terms of the Combination
1. The Combination and Scheme will be governed by the laws
of Guernsey and be subject to the jurisdiction of the Court and to the
conditions and further terms set out in this Appendix 1 and the full terms and
conditions to be set out in the Scheme Document to be published in due course.
The Combination will be subject to the applicable requirements of the
Companies Law of Guernsey, the Court, the GFSC, the Takeover Code, the Panel,
the London Stock Exchange and the FCA.
2. Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other Condition.
3. Fractions of New BBOX Shares will not be allotted or
issued pursuant to the Combination and entitlements of Scheme Shareholders to
New BBOX Shares will be rounded down to the nearest whole number of New BBOX
Shares. All fractional entitlements to New BBOX Shares will be aggregated and
sold in the market as soon as practicable after the Effective Date. The net
proceeds of such sale (after deduction of all expenses and commissions
incurred in connection with the sale) will be distributed by BBOX in due
proportions to Scheme Shareholders who would otherwise have been entitled to
such fractions provided that individual entitlements to amounts of less than
£5 will not be paid to Scheme Shareholders but will be retained for the
benefit of the Combined Group.
4. The Combination is not being made, directly or
indirectly, in, into or from, or by use of the mails of, or by any means or
instrumentality (including, but not limited to, facsimile e-mail or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or of any facility of a national, state or other securities exchange of,
any Restricted Jurisdiction where to do so would violate the laws of that
jurisdiction.
5. The availability of the Combination to UKCM Shareholders
not resident in the United Kingdom or Guernsey may be affected by the laws of
the relevant jurisdictions. Persons who are not resident in the United Kingdom
or Guernsey should inform themselves about and observe any applicable
requirements. Further details in relation to overseas shareholders will be
contained in the Scheme Document in due course. The New BBOX Shares to be
issued pursuant to the Combination have not been and will not be registered
under the US Securities Act or under any laws or with any securities
regulatory authority of any State or other jurisdiction of the United States
or under any of the relevant securities laws of any other Restricted
Jurisdiction. Accordingly, the New BBOX Shares may not be offered, sold or
delivered, directly or indirectly, in or into the United States or any other
Restricted Jurisdiction, except pursuant to exemptions from applicable
securities law requirements of any such jurisdiction, including, without
limitation, the exemption from the registration requirements of the US
Securities Act provided by Section 3(a)(10) thereof.
6. The New BBOX Shares will be issued credited as fully
paid-up and will rank pari passu in all respects with the BBOX Shares in issue
at that time, including the right to receive and retain dividends and other
distributions (if any) announced, declared, made or paid by reference to a
record date on or after the Effective Date (save, for the avoidance of doubt,
any BBOX Quarterly Permitted Dividends and any BBOX Equalising Dividend).
Applications will be made to the FCA for the New BBOX Shares to be admitted to
the Official List with a premium listing and to the London Stock Exchange for
the New BBOX Shares to be admitted to trading on the Main Market.
7. The UKCM Shares which will be acquired under the
Combination will be acquired fully paid and free from all liens, equities,
charges, encumbrances, options, rights of pre-emption and any other third
party rights and interests of any nature and together with all rights now or
hereafter attaching or accruing to them, including voting rights and the right
to receive and retain in full all dividends and other distributions (if any)
declared, made or paid, or any other return of capital (whether by reduction
of share capital or share premium account or otherwise) made or paid on or
after the date of this Announcement, save for the UKCM Permitted Dividends.
8. If, on or after the date of this Announcement and on or
prior to the Effective Date, UKCM announces, declares, makes or pays: (i) a
UKCM Permitted Dividend, and the quantum of such dividend is in excess of the
amount which UKCM is entitled to pay to UKCM Shareholders in accordance with
this Announcement; or (ii) any other dividend, distribution or form of capital
return, BBOX shall be entitled to either: (a) adjust the Exchange Ratio by an
amount equivalent to all or any part of such excess (in the case of a UKCM
Permitted Dividend) or by the amount of all or part of any such other
dividend, distribution or form of capital return; or (b) declare and pay a
BBOX Equalising Dividend to BBOX Shareholders without any consequential change
to the Exchange Ratio. BBOX also reserves the right to adjust the Exchange
Ratio in such circumstances as are, and by such amount as is, permitted by the
Panel. If BBOX exercises its rights under this paragraph 8 to adjust the
Exchange Ratio, any reference in this Announcement to the Exchange Ratio will
be deemed to be a reference to the Exchange Ratio as so adjusted. To the
extent that a dividend or distribution has been declared but not paid prior to
the Effective Date, and such dividend or distribution is cancelled, then the
Exchange Ratio shall not be subject to change in accordance with this
paragraph 8. Any exercise by BBOX of its rights referred to in this
paragraph 8 will be the subject of an announcement and, for the avoidance
of doubt, will not be regarded as constituting any revision or variation of
the Combination.
9. If, on or after the date of this Announcement and on or
prior to the Effective Date, BBOX announces, declares, makes or pays: (i) a
BBOX Permitted Dividend, and the quantum of such dividend is in excess of the
amount which BBOX is entitled to pay to BBOX Shareholders in accordance with
this Announcement; or (ii) any other dividend, distribution or form of capital
return, UKCM shall be entitled to either: (a) adjust the Exchange Ratio by an
amount equivalent to all or any part of such excess (in the case of a BBOX
Permitted Dividend) or by the amount of all or part of any such other
dividend, distribution or form of capital return; or (b) declare and pay a
UKCM Equalising Dividend to UKCM Shareholders without any consequential change
to the Exchange Ratio. If UKCM exercises its rights under this paragraph 9
to adjust the Exchange Ratio, any reference in this Announcement to the
Exchange Ratio will be deemed to be a reference to the Exchange Ratio as so
adjusted. To the extent that a dividend or distribution has been declared but
not paid prior to the Effective Date, and such dividend or distribution is
cancelled, then the Exchange Ratio shall not be subject to change in
accordance with this paragraph 9. Any exercise by UKCM of its rights
referred to in this paragraph 9 will be the subject of an announcement and,
for the avoidance of doubt, will not be regarded as constituting any revision
or variation of the Combination.
10.
appendix 2
SOURCES OF INFORMATION AND BASES OF CALCULATION
Unless otherwise stated, the following constitute the sources of information
and bases of calculations in this Announcement:
· All prices quoted for BBOX Shares and UKCM Shares are closing
middle market quotations of a BBOX Share or UKCM Share (as applicable) derived
from the Daily Official List of the London Stock Exchange on the relevant
date(s).
· Issued share capital of UKCM is 1,299,412,465 ordinary shares of
25 pence each. UKCM has no shares held in treasury and no share schemes.
· Issued share capital of BBOX is 1,903,738,325 ordinary shares of
1 penny each. BBOX has no shares held in treasury and no share schemes.
· All volume-weighted average UKCM share prices are derived from
data provided by Bloomberg for the relevant time periods.
· Property portfolio and valuation information relating to BBOX is
from the property valuation reports produced by CBRE and Colliers as set out
in Parts B and C of Appendix 5 to this Announcement.
· Property portfolio and valuation information relating to UKCM is
from the property valuation report produced by CBRE as set out in Part A of
Appendix 5 to this Announcement.
· The financial information relating to BBOX is extracted from the
audited results for the full-year ended 31 December 2023, released on 1 March
2024, adjusted for the acquisition of an asset on Castlewood Business Park in
January 2024.
· The financial information relating to UKCM is extracted from the
unaudited NAV statement for the full-year ended 31 December 2023, released on
7 February 2024, adjusted for the disposal, in line with 31 December 2023 book
value, of:
o Craven House, as announced on 7 February 2024; and
o 2 Rivergate in Temple Quay, as announced on 1 March 2024.
· The Combined Groups' loan-to-value ratio of 29 per cent. is based
on UKCM net debt of £185 million (being the 31 December 2023 net debt
adjusted for the two disposals as described above) and BBOX's net debt of
£1,630 million (being the 31 December 2023 net debt adjusted for the
acquisition of the asset described above).
· EBITDA is calculated as operating profit before changes in fair
value and other adjustments, adjusted for post period end acquisitions &
disposals.
· "total accounting return" is the growth in NAV per ordinary share
plus the dividends paid per ordinary share, in the relevant period.
· Reversion is calculated on the difference between and asset's
Estimated Rental Value and current Contracted Rent.
· "total shareholder return" is measured as the movement in share
price over a period of time plus any dividends paid during the same period.
This has been calculated as an internal rate of return, reflecting a
shareholder's annualised return over a given period of time based on data
provided by Bloomberg for the relevant time periods.
· BBOX adjusted earnings per share is calculated on the basis of
earnings per share excluding items considered to be exceptional and additional
development management agreement income.
· Combined portfolio statistics are calculated by the addition of
the relevant figures for UKCM and BBOX on the basis outlined above.
· These returns as outlined in the bullet "Value creation from
capital recycling" at paragraph 3(a)(i) of this Announcement are illustrative
estimated of this document only seek to highlight the impact of the deployment
of disposal proceeds of UKCM's non-logistics assets into BBOX's development
pipeline, assuming inter alia all properties are developed and fully let, no
further changes to capital structure and without taking into account future
ordinary course of business items (including acquisitions, disposals, asset
management and additional debt). None of these estimates constitute a profit
forecast and there can be no assurance that these illustrative returns (or any
returns) will be achieved by the Combined Group. Accordingly, they should not
be taken as an indication of estimated or actual future results and no
reliance should be placed on these illustrative figures. The Combined Group's
actual results may be positively or negatively affected by factors beyond the
control of the Combined Group and the actual returns generated by the Combined
Group may prove to be materially lower than the illustrative returns set out
above in this announcement.
· UKCM weighted average cost of debt and percentage of debt at a
fixed cost is based on gross borrowings of £205 million, representing the two
£100 million Barings term loans and £5 million drawn under the Barclays RCF.
This reflects repayments of the RCF following 31 December 2023 with proceeds
from the property sales detailed above.
appendix 3
Part 1: DETAILS OF IRREVOCABLE UNDERTAKINGS AND LETTER OF INTENT IN RESPECT OF
UKCM SHARES
UKCM Recommending Directors' Irrevocable Undertakings
The following UKCM Recommending Directors who control and/or hold beneficial
interests in UKCM Shares have given irrevocable undertakings to vote, or
procure that the registered holder votes, in favour of the Scheme at the Court
Meeting and the UKCM resolution(s) at the UKCM General Meeting in respect of
their own beneficial holdings of UKCM Shares (or those UKCM Shares over which
they have control):
Name of UKCM Director Number of UKCM Shares Percentage of UKCM's issued ordinary share capital (per cent.)
Michael Ayre 192,000 0.01
Chris Fry 106,445 0.00
Fionnuala Hogan 69,221 0.00
Margaret Littlejohns 60,000 0.00
Total 427,666 0.03
Notes:
1. The UKCM Shares referred to in the table above are held via
nominees. In each case, the UKCM Shareholder has undertaken to vote
himself/herself, or to procure the exercise of the votes attaching to his/her
UKCM Shares, in favour of the UKCM resolution(s).
2. The percentages in the table above have been truncated to two
decimal places.
The undertakings provided by the UKCM Directors will cease to be binding if:
• BBOX announces, with the consent of the Panel, that it does
not intend to proceed with the Combination in accordance with Rule 2.8 of the
Takeover Code;
• in the event that the Combination proceeds by way of the
Scheme, the Scheme or any resolution to be proposed that is required to
implement the Scheme is not approved by the requisite majority of UKCM
Shareholders at the UKCM General Meeting or the Court Meeting;
• in the event that the Combination proceeds by way of
Takeover Offer, the Offer Document is not posted to the UKCM Shareholders
within the permitted period under the Takeover Code or as otherwise agreed by
the Panel;
• if any resolution to be proposed to approve and implement
the Combination is not approved by the requisite majority of BBOX Shareholders
at the BBOX General Meeting to be convened in connection with the Combination;
or
• on the earlier of:
o the Long-Stop Date; and
o the date on which the Combination is withdrawn or lapses in accordance
with its terms (other than where the Combination is withdrawn or lapses and a
new, revised or replacement Scheme or Takeover Offer has been announced in
accordance with Rule 2.7 of the Takeover Code at the same time).
UKCM Shareholder Irrevocable Undertaking
The following UKCM Shareholder has given an irrevocable undertaking to vote in
favour of the Scheme at the Court Meeting and the UKCM resolution(s) at the
UKCM General Meeting in respect of the following holding of UKCM Shares (or
those UKCM Shares over which they have control):
Name of UKCM Shareholder Number of UKCM Shares Percentage of UKCM's issued ordinary share capital (per cent.)
Phoenix Life Limited 563,773,465 43.4
The undertakings provided by the UKCM Shareholder will cease to be binding if:
• BBOX announces a possible offer or a firm offer to acquire
all of the issued and to be issued ordinary share capital of UKCM at an
exchange ratio below the Exchange Ratio, subject to any adjustment permitted
under the terms of the Combination set out in this Announcement (including,
without limitation, the exercise by BBOX of the right to adjust the Exchange
Ratio set out in paragraph 8 of Part D of Appendix 1 of this Announcement);
• the Scheme Document or Offer Document (as applicable) is not
published within 28 days of the date of release of this Announcement (or
within such longer period as the Panel may agree);
• BBOX announces, with the consent of the Panel, that it does
not intend to proceed with the Combination and no new, revised or replacement
combination (to which the undertaking applies) is announced in accordance with
Rule 2.7 of the Takeover Code at the same time;
• the Takeover Offer or Scheme lapses or is withdrawn and no
new, revised or replacement combination (to which the undertaking applies) is
announced in accordance with Rule 2.7 of the Takeover Code at the same time;
• at any time prior to the Scheme becoming effective or the
Takeover Offer becoming unconditional (as applicable):
o in accordance with Rule 2.7 of the Takeover Code, a third party (the
"Competing Bidder") announces a firm intention to acquire the entire issued
and to be issued share capital of UKCM not already owned by the Competing
Bidder on terms which represent not less than 78.24 pence per UKCM Share as at
the date on which the Competing Bidder announces its firm intention (the
"Higher Competing Offer"); and
o BBOX does not increase the consideration offered under the Combination to
an amount which represents an offer value equal to or higher than the
consideration offered pursuant to the Higher Competing Offer (in the
reasonable opinion of Phoenix) by 11:59 p.m. (UK time) on the third business
day after the date of the firm intention announcement of the Higher Competing
Offer; and
o in the event that some or all of the consideration pursuant to the Higher
Competing Offer is in the form of securities of a class already admitted to
the Official List of the FCA and traded on the London Stock Exchange or
admitted to AIM or any other overseas investment exchange recognised or
designated by the FCA for the purposes of FSMA (as amended from time to time),
the implied value of the securities exchange component of the Higher Competing
Offer will be calculated based upon the Competing Bidder's undisturbed share
price (being the closing share price on the business day prior to the
announcement of the Higher Competing Offer) multiplied by the exchange ratio
of the securities exchange component of the Higher Competing Offer; or
• the Combination has not completed prior to the Long Stop
Date.
UKCM Shareholder Letter of Intent
Name of UKCM Shareholder Number of UKCM Shares Percentage of UKCM's issued ordinary share capital (per cent.)
Investec Wealth and Investment Limited 170,000,000 13.1
Part 2: DETAILS OF IRREVOCABLE UNDERTAKINGS IN RESPECT OF BBOX SHARES
The following BBOX Directors who control and/or hold beneficial interests in
BBOX Shares have given irrevocable undertakings to vote, or procure that the
registered holder votes, in favour of the BBOX Resolutions at the BBOX General
Meeting in respect of their own beneficial holdings of BBOX Shares (or those
BBOX Shares over which they have control):
Name of BBOX Director Number of BBOX Shares Percentage of BBOX's issued ordinary share capital (per cent.)
Aubrey Adams 240,000 0.01
Elizabeth Brown 20,382 0.00
Wu Gang 2,600 0.00
Alastair Hughes 46,483 0.00
Richard Laing 50,000 0.00
Karen Whitworth 30,705 0.00
Total 390,170 0.02
Notes:
1. The BBOX Shares referred to in the table above are held via
nominees. In each case, the BBOX Shareholder has undertaken to vote
himself/herself, or to procure the exercise of the votes attaching to his/her
BBOX Shares, in favour of the BBOX Resolution.
2. The percentages in the table above have been rounded to two decimal
places.
The undertakings provided by the BBOX Directors will cease to be binding if:
• the Combination has not completed prior to the Long Stop
Date;
• BBOX announces, with the consent of the Panel, that it does
not intend to proceed with the Combination and no new, revised or replacement
combination (to which the undertaking applies) is announced in accordance with
Rule 2.7 of the Takeover Code at the same time; or
• the Takeover Offer or Scheme lapses or is withdrawn and no
new, revised or replacement combination (to which the undertaking applies) is
announced in accordance with Rule 2.7 of the Takeover Code at the same time.
appendix 4
QUANTIFIED FINANCIAL BENEFITS STATEMENT
Part A
Paragraph 4 of this Announcement contains statements of estimated cost
savings and synergies expected to arise from the Combination (together, the
"Quantified Financial Benefits Statement").
A copy of the Quantified Financial Benefits Statement is set out below:
The BBOX Directors, having reviewed and analysed the potential cost savings of
the Combined Group, as well as taking into account factors they can influence,
believe the Combined Group can deliver shareholder value through the expected
realisation of approximately £4.0 million of pre-tax recurring cost
synergies. The cost synergies are expected to be realised principally from:
a) Investment management fees: unification of investment management
services under the BBOX Manager, delivering an expected £2.6 million of cost
synergies per annum derived from lower investment management fees charged on
the UKCM EPRA NTA ; and
b) Corporate and administrative costs: de-duplication and rationalisation
of duplicated listing, administration and operational expenses delivering an
estimated £1.4 million of cost synergies per annum.
The identified cost savings are contingent on the Combination and would not be
achieved independently. The estimated cost synergies referred to above reflect
both the beneficial elements and the relevant costs.
The UKCM Manager has agreed to waive the early termination payment of £6.7
million which would be contractually payable by UKCM on completion of the
Combination as a result of the UKCM IMA being agreed to be terminated at such
time under the UKCM IMA Termination Agreement. The BBOX Directors have
considered other recurring or one-off costs in connection with realising the
expected cost synergies and have reflected these in the expected recurring
cost synergy figure.
Potential areas of dis-synergy have been considered by the BBOX Directors and
are reflected in the analysis.
These statements relating to estimated investment management fee savings and
other identified cost savings relate to future actions or circumstances which
by their nature involve risks, uncertainties and contingencies. As a
consequence, the identified synergies and estimated savings referred to may
not be achieved, may be achieved later or sooner than estimated, or those
achieved could be materially different from those estimated.
Further information on the bases of belief supporting the Quantified Financial
Benefits Statement, including the principal assumptions and sources of
information, is set out below.
Bases of Belief and Principal Assumptions
Following initial discussion regarding the Combination, senior BBOX personnel,
have worked to identify, challenge, and quantify potential synergies as well
as the potential costs to achieve and timing of such synergies. The assessment
and quantification of potential synergies have been informed by BBOX
management's industry expertise and knowledge.
In preparing the Quantified Financial Benefits Statement, UKCM has shared
certain operational and financial information to facilitate a detailed
analysis in support of evaluating the potential synergies available from the
creation of the Combined Group.
The BBOX team has performed a bottom-up analysis of the costs included in the
UKCM financial information and has sought to include in the synergy analysis
those costs which it believes will be either reduced or eliminated as part of
the Combined Group.
The investment management fee savings are based on applying BBOX management
fee bands and assumptions regarding the Combined Group's EPRA NTA as at 31
December 2023, being the basis on which the BBOX management fee is calculated,
compared to the aggregate of the management fees incurred by BBOX and UKCM
which are calculated on different bases. Management's estimate of one-off
costs assumes no termination fees in respect of the UKCM IMA will be payable
by UKCM or BBOX, given under the UKCM IMA Termination Agreement, it has been
agreed by the UKCM Manager to waive the early termination payment.
The cost bases used as the basis for the quantified financial benefits
exercise are the BBOX full year expenses for the financial year ended 31
December 2023, the UKCM full year expenses for the year ended 31 December
2023, adjusted for known changes to certain costs implemented during the year
ended 31 December 2023, and the external BBOX and UKCM property valuations as
at 31 December 2023.
The BBOX Directors have, in addition, made the following assumptions:
· The value of the Combined Group's property portfolio remaining at
the 31 December 2023 external valuation of £4.4 billion, noting that the
latest Combined Group property portfolio valuation, as referenced in this
Statement is £6.3 billion.
· Estimated transaction costs associated with the Combination are
deducted from the EPRA NTA used for the calculation of the Combined Group's
investment management fee.
· BBOX retains its status as a UK REIT.
· There will be no material impact on the underlying operations of
the Combined Group or its ability to continue to conduct its business.
· There will be no material change to the make-up of the Combined
portfolio for the purposes of this analysis.
· There will be no material change to macroeconomic, political,
regulatory, or legal conditions in the markets or regions in which BBOX or
UKCM operate that will materially impact on the implementation or costs to
achieve the proposed cost savings.
· There will be no change in tax legislation or tax rates or other
legislation in the UK that could materially impact the ability to achieve any
benefits.
Reports
As required by Rule 28.1(a) of the Takeover Code, BDO, as reporting accountant
to BBOX, and Jefferies, as lead financial adviser to BBOX, have provided the
opinions required under that Rule. Copies of these reports are included at
Parts B and C of this Appendix 4.
Each of BDO and Jefferies has given and not withdrawn its consent to the
inclusion of its report in this Announcement in the form and context in which
it is included.
These statements are not intended as a profit forecast and should not be
interpreted as such. These statements of estimated synergies relate to future
actions and circumstances which, by their nature, involve risks, uncertainties
and contingencies. As a result, the estimated synergies referred to may not be
achieved, or may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. Neither the Quantified
Financial Benefits Statement nor any other statement in this Announcement
should be construed as a profit forecast or interpreted to mean that BBOX's
earnings in the first full year following the Effective Date, or in any
subsequent period, will necessarily match or be greater than or be less than
those of BBOX or UKCM for the relevant preceding financial period or any other
period.
Due to the scale of the Combined Group, there may be additional changes to the
Combined Group's operations. As a result, and given the fact that the changes
relate to the future, the resulting synergies may be materially greater or
less than those estimated.
Part B - Report from BDO LLP
BDO LLP
55 Baker Street
London
W1U 7EU
The Directors 21 March 2024
Tritax Big Box REIT plc
72 Broadwick Street
London
W1F 9QZ
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
Dear Sir or Madam
Tritax Big Box REIT plc (the "Company")
Proposed acquisition by the Company of the entire issued and to be issued
share capital of UK Commercial Property REIT Limited
We report on the quantified financial benefits statement (the "Statement") by
the directors of the Company (the "Directors") included in Part A of Appendix
4 of the Rule 2.7 Announcement (the "Announcement") dated 21 March 2024 to the
effect that:
"The BBOX Directors, having reviewed and analysed the potential cost savings
of the Combined Group, as well as taking into account factors they can
influence, believe the Combined Group can deliver shareholder value through
the expected realisation of approximately £4.0 million of pre-tax recurring
cost synergies. The cost synergies are expected to be realised principally
from:
a) Investment management fees: unification of investment management
services under the BBOX Manager, delivering an expected £2.6 million of cost
synergies per annum derived from lower investment management fees charged on
the UKCM EPRA NTA ; and
b) Corporate and administrative costs: de-duplication and rationalisation
of duplicated listing, administration and operational expenses delivering an
estimated £1.4 million of cost synergies per annum.
The identified cost savings are contingent on the Combination and would not be
achieved independently. The estimated cost synergies referred to above reflect
both the beneficial elements and the relevant costs.
The UKCM Manager has agreed to waive the early termination payment of £6.7
million which would be contractually payable by UKCM on completion of the
Combination as a result of the UKCM IMA being agreed to be terminated at such
time under the IMA Termination Agreement. The BBOX Directors have considered
other recurring or one-off costs in connection with realising the expected
cost synergies and have reflected these in the expected recurring cost synergy
figure.
Potential areas of dis-synergy have been considered by the BBOX Directors and
are reflected in the analysis.
Opinion
In our opinion, the Statement has been properly compiled on the basis stated.
The Statement has been made in the context of the disclosures in Part A of
Appendix 4 of the Announcement setting out the basis of the Directors' belief
(including the principal assumptions and sources of information supporting the
Statement and their analysis and explanation of the underlying constituent
elements).
This report is required by Rule 28.1(a) of the City Code on Takeovers and
Mergers (the "Takeover Code") and is given for the purpose of complying with
that requirement and for no other purpose.
Responsibilities
It is the responsibility of the Directors to prepare the Statement in
accordance with the requirements of Rule 28 of the Takeover Code.
It is our responsibility to form our opinion, as required by Rule 28.1(a) of
the Takeover Code, as to whether the Statement has been properly compiled on
the basis stated and to report that opinion to you.
Save for any responsibility which we may have to those persons to whom this
report is expressly addressed, to the fullest extent permitted by law we do
not assume any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result of, arising
out of, or in connection with this report or our statement, required by and
given solely for the purposes of complying with Rule 23.2 of the City Code,
consenting to its inclusion in the Announcement.
Basis of preparation of the Statement
The Statement has been prepared on the basis stated in Part A of Appendix 4 of
the Announcement.
Basis of opinion
We conducted our work in accordance with the Standards for Investment
Reporting issued by the Financial Reporting Council ("FRC") in the United
Kingdom. We are independent in accordance with the FRC's Ethical Standard as
applied to Investment Circular Reporting Engagements, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
We have discussed the Statement, together with the basis of the Directors'
belief, with the Directors and Jefferies International Limited. Our work did
not involve any independent examination of any of the financial or other
information underlying the Statement.
We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the Statement has been properly compiled on the basis stated.
Our work has not been carried out in accordance with auditing or other
standards and practices generally accepted in the United States of America or
other jurisdictions outside the United Kingdom and accordingly should not be
relied upon as if it had been carried out in accordance with those standards
and practices.
We do not express any opinion as to the achievability of the benefits
identified by the Directors in the Statement.
Since the Statement and the assumptions on which it is based relate to the
future and may therefore be affected by unforeseen events, we express no
opinion as to whether the actual benefits achieved will correspond to those
anticipated in the Statement and the differences may be material.
Yours faithfully
BDO LLP
Chartered Accountants
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127)
Part C - Report from Jefferies International Limited
REPORT FROM JEFFERIES ON BBOX QUANTIFIED FINANCIAL BENEFITS STATEMENT
The Board of Directors
Tritax Big Box Plc
72 Broadwick Street
London
W1F 9QZ
21 March 2024
Dear Sirs / Madams
Recommended All-Share Combination of Tritax Big Box Plc ("BBOX") and UK
Commercial Property REIT Limited - Quantified Financial Benefits Statement of
BBOX
We refer to the Quantified Financial Benefits Statement, the bases of belief
thereof and the notes thereto (together, the "Statement") made by BBOX, as set
out in Part A of Appendix 4 of the Rule 2.7 announcement dated 21 March 2024
of which this letter forms part (the "Announcement"), for which the board of
directors of BBOX (the "Directors") are solely responsible under Rule 28.3 of
the UK City Code on Takeovers and Mergers (the "Code").
We have discussed the Statement (including the assumptions, bases of
calculation and sources of information referred to therein) with the Directors
and those officers and employees of BBOX who developed the underlying plans as
well as with BDO LLP ("BDO"). The Statement is subject to uncertainty as
described in the Announcement and our work did not involve an independent
examination of any of the financial or other information underlying the
Statement.
We have relied upon the accuracy and completeness of all the financial and
other information provided to us by or on behalf of BBOX, or otherwise
discussed with or reviewed by us, and we have assumed such accuracy and
completeness for the purposes of providing this letter.
We do not express any view as to the achievability of the quantified financial
benefits identified by the Directors in the Statement or otherwise.
We have also reviewed the work carried out by BDO and have discussed with them
the opinion set out in Part B of Appendix 4 of the Announcement addressed to
yourselves and ourselves on this matter, and the bases of calculation for the
Statement.
This letter is provided pursuant to our engagement letter with BBOX to the
Directors solely in connection with Rule 28.1(a)(ii) of the Code and for no
other purpose. We accept no responsibility to BBOX or its shareholders or any
person other than the Directors in respect of the contents of this letter. We
are acting exclusively as financial adviser to BBOX and no one else in
connection with the offer by BBOX for UKCM referred to in the Announcement and
it was for the purpose of complying with Rule 28.1(a)(ii) of the Code that
BBOX requested Jefferies International Limited to prepare this report on the
Statement. No person other than the Directors can rely on the contents of this
letter, and to the fullest extent permitted by law, we exclude all liability
(whether in contract, tort or otherwise) to any other person, in respect of
this letter, its contents or the work undertaken in connection with this
letter or any of the results that can be derived from this letter or any
written or oral information provided in connection with this letter, and any
such liability is expressly disclaimed except to the extent that such
liability cannot be excluded by law.
On the basis of the foregoing, we consider that the Statement, for which you
as the Directors are solely responsible for purposes of the Code, has been
prepared with due care and consideration.
Yours faithfully,
Jefferies International Limited
appendix 5
Property Valuation Reports
Part A - CBRE Valuation Report in respect of UKCM
In respect of:
Portfolio of 39 properties held by UK Commercial REIT Limited
On behalf of:
the Addressees as set out below
Date of valuation:
31 December 2023
Contents
01 Valuation Report (#_Toc161813315) (#_Toc161813315)
Introduction (#_Toc161813316) (#_Toc161813316)
Source of Information and Scope of Works (#_Toc161813317) (#_Toc161813317)
Valuation Assumptions (#_Toc161813318) (#_Toc161813318)
02 Appendices (#_Toc161813319) (#_Toc161813319)
Appendix A: Schedule of Properties as at 31 December 2023 (#_Toc161813320)
(#_Toc161813320)
Appendix B: Market Value of the Properties as at 31 December 2023 split by
property type (100%) (#_Toc161813321)
Appendix C: Market Value of the Properties as at 31 December 2023 split by
property location (100%) (#_Toc161813322)
Appendix D: Market Value of the Properties in the course of development as at
31 December 2023 (100%) (#_Toc161813323)
CBRE Limited
Henrietta House
Henrietta Place
London W1G 0NB
Valuation Report
Introduction
Report Date 21 March 2024
Valuation Date 31 December 2023
Addressees UK Commercial Property REIT Limited
PO Box 255
Trafalgar Court Les Banques
St Peter Port
Channel Islands
GY1 3QL
Guernsey
(hereinafter referred to as "UKCM" or the "Company")
N.M. Rothschild & Sons Limited
New Court, St Swithin's Lane
London
EC4N 8AL
(in their capacity as lead financial adviser to the Company)
Numis Securities Limited (trading as Deutsche Numis)
45 Gresham Street
London
EC2V 7BF
(in their capacity as joint financial adviser to the Company)
Tritax Big Box REIT plc
72 Broadwick Street
London
W1F 9QZ
(hereinafter referred to as "Tritax Big Box")
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
(in their capacity as sponsor and lead financial adviser to Tritax Big Box)
Akur Limited
66 St James's St
London
SW1A 1NE
(in their capacity as joint financial adviser to Tritax Big Box)
J.P. Morgan Securities Plc
25 Bank Street
Canary Wharf
London
E14 5JP
(in their capacity as joint financial adviser to Tritax Big Box)
(and all the above collectively referred to as the "Addressees")
The Properties 39 properties held by UKCM and its group, as set out in the Schedule of
Properties below in Appendix A (each a "Property" and together the
"Properties").
Instruction To value without re-inspecting the unencumbered freehold and leasehold
interests (as applicable) of the Properties on the basis of Market Value as at
the Valuation Date in accordance with Terms of Engagement entered into between
CBRE Ltd ("CBRE") and the Addressees dated 20 March 2024 (the "Valuation").
Status of Valuer You have instructed us to act as an "external valuer" as defined in the
current version of the RICS Valuation - Global Standards (2022).
Please note that the Valuation may be investigated by the RICS for the
purposes of the administration of the Institution's conduct and disciplinary
regulations in order to ensure compliance with the RICS Valuation - Global
Standards (2022).
Purpose and Basis of Valuation The Valuation has been prepared for a Regulated Purpose as defined in the RICS
Valuation - Global Standards (2022) (incorporating the International Valuation
Standards) and the UK national supplement current as at the Valuation Date
(the "Red Book").
We understand that our valuation report and the Appendices to it (together the
"Valuation Report") are required for inclusion in an announcement to be issued
by Tritax Big Box in connection with the proposed recommended all-share offer
by Tritax Big Box for the entire issued and to be issued ordinary share
capital of the Company (the "Transaction") pursuant to Rule 2.7 of the City
Code on Takeovers and Mergers (the "Code") (the "Announcement).
This Valuation has been prepared on the basis of Market Value as defined in
the current edition of the RICS Valuation - Global Standards (2022) and in
accordance with the Valuation Assumptions set out below.
The effective date of our Valuation is 31 December 2023 (the "Valuation
Date").
In accordance with the Red Book, we have made certain disclosures in
connection with this valuation instruction and our relationship with the
Addressees.
Market Value of the Properties as at 31 December 2023 (100%) £1,251,050,000 (ONE BILLION, TWO HUNDRED AND FIFTY ONE MILLION AND FIFTY
THOUSAND POUNDS ) exclusive of VAT, as shown in the Schedule of Capital Values
set out below.
For the avoidance of doubt, we have valued the Properties as real estate and
the values reported above represent 100% of the market values of the assets.
There are no negative values to report.
Our opinion of Market Value is based upon the Scope of Work and Valuation
Assumptions attached, and has been primarily derived using comparable recent
market transactions on arm's length terms.
The Properties are split by property type and tenure as follows.
Market Value of Properties held for Investment £1,132,600,000 £ 86,300,000 £ 1,218,900,000
(36 Properties) (2 Properties) (38 Properties)
Market Value of Properties held for Development £32,150,000 £32,150,000
(1 Property) (1 Property)
Report Format Appendix A of this Valuation Report contains the Schedule of Properties.
Appendix B provides a split of the value of the Properties by use type.
Appendix C provides a split of the value of the Properties by location.
Appendix D provides a summary of the properties in the course of development.
The Company has expressly instructed us not to disclose certain information
which is considered commercially sensitive, namely the individual values of
the Properties.
Market Conditions We draw your attention to a combination of global inflationary pressures
(leading to higher interest rates) and recent failures/stress in banking
systems which have increased the potential for constrained credit markets,
negative capital value movements and enhanced volatility in property markets
over the short-to-medium term. While there is still liquidity in the market,
ongoing geopolitical uncertainties, economic challenges and the cost and
accessibility of debt finance could further impact pricing.
Experience has shown that consumer and investor behaviour can quickly change
during periods of such heightened volatility. Lending or investment decisions
should reflect this heightened level of volatility and the potential for
deteriorating market conditions.
It is important to note that the conclusions set out in this Valuation Report
are valid as at the Valuation Date only. Where appropriate, we recommend that
the valuation is closely monitored, as we continue to track how markets
respond to evolving events.
Portfolios and Aggregation We have valued the Properties individually and no account has been taken of
any discount or premium that may be negotiated in the market if all or part of
the portfolio was to be marketed simultaneously, either in lots or as a whole.
Valuation Approach for Properties in Course of Development In the case of development valuations, we would draw your attention to the
fact that, even in normal market conditions, the residual method of valuation
is very sensitive to changes in key inputs, with small changes in variables
(such as the timing of the development, finance/construction costs and sales
rates) having a disproportionate effect on land value.
Consequently, in reference to the Market Conditions section above it is
inevitable that there is even greater uncertainty in respect of development
valuations, with site values being susceptible to much more variance than
normal.
Building Contracts Current supply issues associated with some building material shortages are
impacting on construction costs and timing.
Unexecuted construction / building contracts may be subject to price increases
and executed contracts may contain conditions which allow the builder to pass
on any increases to the instructing party.
We recommend you obtain appropriate advice to confirm there are no adverse
conditions within the final construction/building contract and/or ensure there
are additional funds available to cover potential cost escalations.
Rising building costs and shortages of labour and materials may also affect
the builder`s viability and/or ability to meet construction timeframes. In
this climate, we strongly recommend you verify the experience and financial
capability of the builder to complete the project on time and on budget.
Caution is advised in this regard.
In the absence of any information to the contrary, we have assumed that the
construction contract and any warranties will be assignable.
Construction Cost Volatility Material costs, labour costs and supply chains are unusually volatile with the
market experiencing price increases in some, or all of these areas during 2022
and continuing into 2023. This has created significant uncertainty in cost
estimates, which is likely to continue. In addition, there are significant
risks that delays may be encountered in sourcing materials and labour, and as
such, delivery risks are also heightened in this climate.
Furthermore, the likelihood of ongoing cost escalations and sourcing delays is
high. This may place additional pressure on both the developer's and builder's
profit margins and development viability.
These inherent risks should therefore be given careful consideration in
lending and investment decisions. Caution is advised in this regard.
Compliance with Valuation Standards The Valuation has been prepared in accordance with the latest version of the
RICS Valuation - Global Standards (2022), incorporating the International
Valuation Standards, and the UK national supplement (the "Red Book") current
as the Valuation Date.
We confirm that the valuations have been prepared in accordance with the
requirements of Rule 29 of the Code.
The
Prope
rties
have
been
value
d by
value
rs
who
are
appro
priat
ely
and
profe
ssion
ally
quali
fied,
suita
bly
exper
ience
d and
indep
enden
t of
the
Compa
ny
and
Trita
x Big
Box
and
have
the
appro
priat
e
compe
tence
s for
the
purpo
se of
the
Valua
tion
in
accor
dance
with
the
Red
Book
and
Rule
29.3
(a)
(ii)
and
(iii)
of
the
Code.
We
confi
rm
that
we
have
suffi
cient
and
curre
nt
local
and
natio
nal
knowl
edge
of
the
parti
cular
prope
rty
marke
t
invol
ved
and
have
the
neces
sary
skill
s and
under
stand
ing
to
under
take
the
Valua
tion
compe
tentl
y.
Where
the
knowl
edge
and
skill
requi
remen
ts of
the
Red
Book
have
been
met
in
aggre
gate
by
more
than
one
value
r
withi
n
CBRE,
we
confi
rm
that
a
list
of
those
value
rs
has
been
retai
ned
withi
n the
worki
ng
paper
s,
toget
her
with
confi
rmati
on
that
each
named
value
r
compl
ies
with
the
requi
remen
ts of
the
Red
Book.
This
Valua
tion
is a
profe
ssion
al
opini
on
and
is
expre
ssly
not
inten
ded
to
serve
as a
warra
nty,
assur
ance
or
guara
ntee
of
any
parti
cular
value
of
the
subje
ct
Prope
rties
.
Other
value
rs
may
reach
diffe
rent
concl
usion
s as
to
the
value
of
the
subje
ct
Prope
rties
.
This
Valua
tion
is
for
the
sole
purpo
se of
provi
ding
the
inten
ded
user
with
the
value
r's
indep
enden
t
profe
ssion
al
opini
on
of
the
value
of
the
subje
ct
Prope
rties
as at
the
Valua
tion
Date.
Sustainability Considerations Wherever appropriate, sustainability and environmental matters are an integral
part of the valuation approach. 'Sustainability' is taken to mean the
consideration of such matters as environment and climate change, health and
well-being and corporate responsibility that can or do impact on the valuation
of an asset. In a valuation context, sustainability encompasses a wide range
of physical, social, environmental, and economic factors that can affect
value. The range of issues includes key environmental risks, such as flooding,
energy efficiency and climate, as well as matters of design, configuration,
accessibility, legislation, management, and fiscal considerations - and
current and historic land use.
Sustainability has an impact on the value of an asset, even if not explicitly
recognised. Valuers reflect markets, they do not lead them. Where we recognise
the value impacts of sustainability, we are reflecting our understanding of
how market participants include sustainability requirements in their bids and
the impact on market valuations.
Climate Risk Legislation From June 2019, the Climate Change Act 2008 (2050 Target Amendment) Order 2019
commits the UK Government to reducing greenhouse gas emissions by 100% from
1990 levels (i.e. a Net Zero position) by 2050. In 2021 an interim target was
set, to reduce emissions by 78% by 2035, by decarbonising electricity
generation. This means that fossil fuels used in building, such as natural
gas for heating, are incompatible with this commitment. The proposal to update
the Minimum Energy Efficiency Standards, to require all non-domestic
properties to a minimum EPC rating of B in 2030 has not been ratified and in
the absence of any commentary from the current administration, we assume
landlords will continue to work towards this target.
We also note that the UK's introduction of mandatory climate related
disclosures (reporting climate risks and opportunities consistent with
recommendations by the "Task Force for Climate Related Financial Disclosure"
(TCFD)), including the assessment of so-called physical and transition climate
risks, will potentially have an impact on how the market views such risks and
incorporates them into the sale of letting of assets.
The European Union's "Sustainable Finance Disclosure Regulations" (SFDR) may
impact on UK asset values due to the requirements in reporting to European
investors.
Assumptions The Property details on which each Valuation is based are as set out in this
Valuation Report. We have made various assumptions as to tenure, letting,
taxation, town planning, and the condition and repair of buildings and sites -
including ground and groundwater contamination - as set out below.
If any of the information or assumptions on which the Valuation is based are
subsequently found to be incorrect, the Valuation figures may also be
incorrect and should be reconsidered.
Variations and/or None.
Departures from
Standard Assumptions
Independence The total annual fees, including the fee for this assignment, earned by CBRE
(or other companies forming part of the same group of companies within the UK)
from the Company (or other companies forming part of the same group of
companies) is less than 5.0% of the CBRE group's total annual UK revenues.
It is not anticipated this situation will vary in the financial year to 31
December 2024.
We confirm that neither the valuers concerned nor CBRE have any personal
interest in the Company, Tritax Big Box any of the Properties or in the
outcome of the Valuation.
Previous Involvement and Conflicts of Interest We confirm that we have valued the Properties on behalf of the Company on a
quarterly basis for financial reporting purposes for in excess of 10 years,
the most recent valuation being 31 December 2023.
From time to time, CBRE provides agency or professional services to the
Company.
We do not consider that this previous involvement represents a conflict of
interest and you have confirmed to us that it also considers this to be the
case.
CBRE are also instructed to value and have been doing so the Tritax Big Box
portfolio for Tritax Big Box on a six monthly basis for financial reporting
purposes for in excess of ten years, the most recent valuation being 31
December 2023. CBRE have also been engaged by the Addressees to value the
certain properties in the Tritax Big Box portfolio for the purposes of the
present transaction.
We have put in place information barriers between the valuers of the
Properties and the valuers of the Tritax Big Box portfolio. The Panel have
confirmed to you that CBRE acting with these barriers in place is acceptable
for the purpose of this Valuation and you have confirmed to us the same.
We confirm that -we are not aware of any further conflicts of interest that
would prevent us from exercising the required levels of independency and
objectivity in undertaking the Valuation.
Copies of our conflict of interest checks have been retained within the
working papers.
Disclosure The principal signatory of this Valuation Report has continuously been the
signatory of valuations for the Company since March 2022.
The secondary signatory of this Valuation Report has continuously been the
signatory of valuations for the Company since March 2022.
CBRE has continuously been carrying out valuation instructions for the Company
for in excess of 10 years.
CBRE has carried out valuation, agency and professional services on behalf of
the Company for in excess of 10 years.
Responsibility We are responsible for this Valuation Report and accept responsibility for the
information contained in this Valuation Report and confirm that to the best of
our knowledge (having taken all reasonable care to ensure that such is the
case) the information contained in this Valuation Report is in accordance with
the facts and this Valuation Report makes no omissions likely to affect its
import.Save for any responsibility arising under the Code to any person as and
to the extent there provided, to the fullest extent permitted by law we do not
assume any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result of, arising
out of, or in accordance with this Valuation Report or our statement above.
Reliance Save as set out in "Responsibility" above, the contents of this Valuation
Report may only be relied upon by:
i) Addressees of the Valuation Report; and
ii) Parties who have received prior written consent from CBRE in
the form of a reliance letter;
for the specific purpose set out herein and no responsibility is accepted to
any third party for the whole or any part of its contents.
No reliance may be placed upon the contents of this Valuation Report by any
party for any purpose other than in connection with the purpose of the
Valuation.
Publication We understand that this Valuation Report will also require to be put on public
display on the websites of Tritax Big Box and the Company in accordance with
Rules 26.3 and 29.4 of the Code.
Neither the whole nor any part of our Valuation Report nor any references
thereto may be included in any published document, circular or statement nor
published in any way without our prior written approval of the form and
context in which it will appear.
Such publication of, or reference to this Valuation Report will not be
permitted unless it contains a sufficient contemporaneous reference to any
departure from the Red Book or the incorporation of the special assumptions
referred to herein.
Yours faithfully Yours faithfully
James Hughes Jonathan Oliver
MSc MRICS BSc (Hons) MRICS
Senior Director Director
RICS Registered Valuer RICS Registered Valuer
For and on behalf of CBRE Limited For and on behalf of CBRE Limited
+44 2071823495 +44 7584 525 484
James.Hughes3@cbre.com (mailto:James.Hughes3@cbre.com) Jon.Oliver@cbre.com
Report Format
Appendix A of this Valuation Report contains the Schedule of Properties.
Appendix B provides a split of the value of the Properties by use type.
Appendix C provides a split of the value of the Properties by location.
Appendix D provides a summary of the properties in the course of development.
The Company has expressly instructed us not to disclose certain information
which is considered commercially sensitive, namely the individual values of
the Properties.
Market Conditions
We draw your attention to a combination of global inflationary pressures
(leading to higher interest rates) and recent failures/stress in banking
systems which have increased the potential for constrained credit markets,
negative capital value movements and enhanced volatility in property markets
over the short-to-medium term. While there is still liquidity in the market,
ongoing geopolitical uncertainties, economic challenges and the cost and
accessibility of debt finance could further impact pricing.
Experience has shown that consumer and investor behaviour can quickly change
during periods of such heightened volatility. Lending or investment decisions
should reflect this heightened level of volatility and the potential for
deteriorating market conditions.
It is important to note that the conclusions set out in this Valuation Report
are valid as at the Valuation Date only. Where appropriate, we recommend that
the valuation is closely monitored, as we continue to track how markets
respond to evolving events.
Portfolios and Aggregation
We have valued the Properties individually and no account has been taken of
any discount or premium that may be negotiated in the market if all or part of
the portfolio was to be marketed simultaneously, either in lots or as a whole.
Valuation Approach for Properties in Course of Development
In the case of development valuations, we would draw your attention to the
fact that, even in normal market conditions, the residual method of valuation
is very sensitive to changes in key inputs, with small changes in variables
(such as the timing of the development, finance/construction costs and sales
rates) having a disproportionate effect on land value.
Consequently, in reference to the Market Conditions section above it is
inevitable that there is even greater uncertainty in respect of development
valuations, with site values being susceptible to much more variance than
normal.
Building Contracts
Current supply issues associated with some building material shortages are
impacting on construction costs and timing.
Unexecuted construction / building contracts may be subject to price increases
and executed contracts may contain conditions which allow the builder to pass
on any increases to the instructing party.
We recommend you obtain appropriate advice to confirm there are no adverse
conditions within the final construction/building contract and/or ensure there
are additional funds available to cover potential cost escalations.
Rising building costs and shortages of labour and materials may also affect
the builder`s viability and/or ability to meet construction timeframes. In
this climate, we strongly recommend you verify the experience and financial
capability of the builder to complete the project on time and on budget.
Caution is advised in this regard.
In the absence of any information to the contrary, we have assumed that the
construction contract and any warranties will be assignable.
Construction Cost Volatility
Material costs, labour costs and supply chains are unusually volatile with the
market experiencing price increases in some, or all of these areas during 2022
and continuing into 2023. This has created significant uncertainty in cost
estimates, which is likely to continue. In addition, there are significant
risks that delays may be encountered in sourcing materials and labour, and as
such, delivery risks are also heightened in this climate.
Furthermore, the likelihood of ongoing cost escalations and sourcing delays is
high. This may place additional pressure on both the developer's and builder's
profit margins and development viability.
These inherent risks should therefore be given careful consideration in
lending and investment decisions. Caution is advised in this regard.
Compliance with Valuation Standards
The Valuation has been prepared in accordance with the latest version of the
RICS Valuation - Global Standards (2022), incorporating the International
Valuation Standards, and the UK national supplement (the "Red Book") current
as the Valuation Date.
We confirm that the valuations have been prepared in accordance with the
requirements of Rule 29 of the Code.
The Properties have been valued by valuers who are appropriately and
professionally qualified, suitably experienced and independent of the Company
and Tritax Big Box and have the appropriate competences for the purpose of the
Valuation in accordance with the Red Book and Rule 29.3 (a) (ii) and (iii) of
the Code. We confirm that we have sufficient and current local and national
knowledge of the particular property market involved and have the necessary
skills and understanding to undertake the Valuation competently.
Where the knowledge and skill requirements of the Red Book have been met in
aggregate by more than one valuer within CBRE, we confirm that a list of those
valuers has been retained within the working papers, together with
confirmation that each named valuer complies with the requirements of the Red
Book.
This Valuation is a professional opinion and is expressly not intended to
serve as a warranty, assurance or guarantee of any particular value of the
subject Properties. Other valuers may reach different conclusions as to the
value of the subject Properties. This Valuation is for the sole purpose of
providing the intended user with the valuer's independent professional opinion
of the value of the subject Properties as at the Valuation Date.
Sustainability Considerations
Wherever appropriate, sustainability and environmental matters are an integral
part of the valuation approach. 'Sustainability' is taken to mean the
consideration of such matters as environment and climate change, health and
well-being and corporate responsibility that can or do impact on the valuation
of an asset. In a valuation context, sustainability encompasses a wide range
of physical, social, environmental, and economic factors that can affect
value. The range of issues includes key environmental risks, such as flooding,
energy efficiency and climate, as well as matters of design, configuration,
accessibility, legislation, management, and fiscal considerations - and
current and historic land use.
Sustainability has an impact on the value of an asset, even if not explicitly
recognised. Valuers reflect markets, they do not lead them. Where we recognise
the value impacts of sustainability, we are reflecting our understanding of
how market participants include sustainability requirements in their bids and
the impact on market valuations.
Climate Risk Legislation
From June 2019, the Climate Change Act 2008 (2050 Target Amendment) Order 2019
commits the UK Government to reducing greenhouse gas emissions by 100% from
1990 levels (i.e. a Net Zero position) by 2050. In 2021 an interim target was
set, to reduce emissions by 78% by 2035, by decarbonising electricity
generation. This means that fossil fuels used in building, such as natural
gas for heating, are incompatible with this commitment. The proposal to update
the Minimum Energy Efficiency Standards, to require all non-domestic
properties to a minimum EPC rating of B in 2030 has not been ratified and in
the absence of any commentary from the current administration, we assume
landlords will continue to work towards this target.
We also note that the UK's introduction of mandatory climate related
disclosures (reporting climate risks and opportunities consistent with
recommendations by the "Task Force for Climate Related Financial Disclosure"
(TCFD)), including the assessment of so-called physical and transition climate
risks, will potentially have an impact on how the market views such risks and
incorporates them into the sale of letting of assets.
The European Union's "Sustainable Finance Disclosure Regulations" (SFDR) may
impact on UK asset values due to the requirements in reporting to European
investors.
Assumptions
The Property details on which each Valuation is based are as set out in this
Valuation Report. We have made various assumptions as to tenure, letting,
taxation, town planning, and the condition and repair of buildings and sites -
including ground and groundwater contamination - as set out below.
If any of the information or assumptions on which the Valuation is based are
subsequently found to be incorrect, the Valuation figures may also be
incorrect and should be reconsidered.
Variations and/or
Departures from
Standard Assumptions
None.
Independence
The total annual fees, including the fee for this assignment, earned by CBRE
(or other companies forming part of the same group of companies within the UK)
from the Company (or other companies forming part of the same group of
companies) is less than 5.0% of the CBRE group's total annual UK revenues.
It is not anticipated this situation will vary in the financial year to 31
December 2024.
We confirm that neither the valuers concerned nor CBRE have any personal
interest in the Company, Tritax Big Box any of the Properties or in the
outcome of the Valuation.
Previous Involvement and Conflicts of Interest
We confirm that we have valued the Properties on behalf of the Company on a
quarterly basis for financial reporting purposes for in excess of 10 years,
the most recent valuation being 31 December 2023.
From time to time, CBRE provides agency or professional services to the
Company.
We do not consider that this previous involvement represents a conflict of
interest and you have confirmed to us that it also considers this to be the
case.
CBRE are also instructed to value and have been doing so the Tritax Big Box
portfolio for Tritax Big Box on a six monthly basis for financial reporting
purposes for in excess of ten years, the most recent valuation being 31
December 2023. CBRE have also been engaged by the Addressees to value the
certain properties in the Tritax Big Box portfolio for the purposes of the
present transaction.
We have put in place information barriers between the valuers of the
Properties and the valuers of the Tritax Big Box portfolio. The Panel have
confirmed to you that CBRE acting with these barriers in place is acceptable
for the purpose of this Valuation and you have confirmed to us the same.
We confirm that -we are not aware of any further conflicts of interest that
would prevent us from exercising the required levels of independency and
objectivity in undertaking the Valuation.
Copies of our conflict of interest checks have been retained within the
working papers.
Disclosure
The principal signatory of this Valuation Report has continuously been the
signatory of valuations for the Company since March 2022.
The secondary signatory of this Valuation Report has continuously been the
signatory of valuations for the Company since March 2022.
CBRE has continuously been carrying out valuation instructions for the Company
for in excess of 10 years.
CBRE has carried out valuation, agency and professional services on behalf of
the Company for in excess of 10 years.
Responsibility
We are responsible for this Valuation Report and accept responsibility for the
information contained in this Valuation Report and confirm that to the best of
our knowledge (having taken all reasonable care to ensure that such is the
case) the information contained in this Valuation Report is in accordance with
the facts and this Valuation Report makes no omissions likely to affect its
import.Save for any responsibility arising under the Code to any person as and
to the extent there provided, to the fullest extent permitted by law we do not
assume any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result of, arising
out of, or in accordance with this Valuation Report or our statement above.
Reliance
Save as set out in "Responsibility" above, the contents of this Valuation
Report may only be relied upon by:
i) Addressees of the Valuation Report; and
ii) Parties who have received prior written consent from CBRE in
the form of a reliance letter;
for the specific purpose set out herein and no responsibility is accepted to
any third party for the whole or any part of its contents.
No reliance may be placed upon the contents of this Valuation Report by any
party for any purpose other than in connection with the purpose of the
Valuation.
Publication
We understand that this Valuation Report will also require to be put on public
display on the websites of Tritax Big Box and the Company in accordance with
Rules 26.3 and 29.4 of the Code.
Neither the whole nor any part of our Valuation Report nor any references
thereto may be included in any published document, circular or statement nor
published in any way without our prior written approval of the form and
context in which it will appear.
Such publication of, or reference to this Valuation Report will not be
permitted unless it contains a sufficient contemporaneous reference to any
departure from the Red Book or the incorporation of the special assumptions
referred to herein.
Yours faithfully
James Hughes
MSc MRICS
Senior Director
RICS Registered Valuer
For and on behalf of CBRE Limited
+44 2071823495
James.Hughes3@cbre.com (mailto:James.Hughes3@cbre.com)
Yours faithfully
Jonathan Oliver
BSc (Hons) MRICS
Director
RICS Registered Valuer
For and on behalf of CBRE Limited
+44 7584 525 484
Jon.Oliver@cbre.com
Source of Information and Scope of Works
Sources of Information We have carried out our work based upon information supplied to us by the
Company and their professional advisors, as set out within this Valuation
Report, which we have assumed to be correct and comprehensive, including:
• Tenancy Schedule named 28022024 Rent Receivable
Tenancy Schedule - UKCM received on 28 February 2024 at 9:32;
• For new acquisitions, we generally receive due
diligence reports, including measured surveys, technical and environmental
reports.
The Properties Our Valuation Report contains a brief summary of the Property details on which
our Valuation has been based.
You have expressly instructed us not to disclose certain information which is
considered by the Company to be commercially sensitive, namely the individual
values of the Properties.
Inspection As part of our Valuation instruction from the Company for financial reporting
purposes, the majority of the Properties have been subject to internal
inspections on a three year rolling basis. As instructed, we have not
re-inspected all the Properties for the purpose of this Valuation.
With regard to those Properties which have not been subject to re-inspection,
the Company has confirmed that they are not aware of any material changes to
the physical attributes of the Properties, or the nature of their location,
since the last inspection. We have assumed this advice to be correct.
Where Properties have not been re-inspected, the valuer will not carry out the
usual range of enquiries performed during a full inspection of these
Properties and will make the appropriate assumptions based on the information
provided or available that, without a full inspection, cannot be verified. The
instructing parties acknowledge and accept the heightened and inherent
uncertainty and risks relying upon a valuation prepared on a desktop basis.
Areas We have not measured the Properties but have relied upon the floor areas
provided to us by you or your professional advisors, which we have assumed to
be correct and comprehensive, and which you have advised us have been
calculated using the: Gross Internal Area (GIA), Net Internal Area (NIA) or
International Property Measurement Standard (IPMS) 3 - Office, measurement
methodology as set out in the latest edition of the RICS Property Measurement
Standards.
Environmental Considerations We have not been instructed to make any investigations in relation to the
presence or potential presence of contamination in land or buildings or the
potential presence of other environmental risk factors and to assume that if
investigations were made to an appropriate extent then nothing would be
discovered sufficient to affect value.
We have not carried out investigation into past uses, either of the property
or of any adjacent lands, to establish whether there is any potential for
contamination from such uses or sites, or other environmental risk factors and
have therefore assumed that none exists.
Sustainability Considerations In carrying out this Valuation, we have considered the impact of
sustainability factors on the value of the Property. Based on our
inspections and our review of the information that was available to us, we
have not identified any risk factors which, in our opinion, would affect
value. However, CBRE gives no warranty as to the absence of such risk
factors in relation to sustainability.
Services and Amenities We understand that the Properties are located in an area served by mains gas,
electricity, water and drainage.
None of the services have been tested by us.
Enquiries regarding the availability of utilities/services to the development
schemes are outside the scope of our Valuation Report.
Repair and Condition We have not carried out building surveys, tested services, made independent
site investigations, inspected woodwork, exposed parts of the structure which
were covered, unexposed or inaccessible, nor arranged for any investigations
to be carried out to determine whether or not any deleterious or hazardous
materials or techniques have been used, or are present, in any part of the
Properties. We are unable, therefore, to give any assurance that the
Properties are free from defect.
Town Planning We have not undertaken planning enquiries.
Titles, Tenures and Lettings Details of title/tenure under which the Properties are held and of lettings to
which it is subject are as supplied to us. We have not generally examined nor
had access to all the deeds, leases or other documents relating thereto. Where
information from deeds, leases or other documents is recorded in this
Valuation Report, it represents our understanding of the relevant documents.
We should emphasise, however, that the interpretation of the documents of
title (including relevant deeds, leases and planning consents) is the
responsibility of your legal adviser.
We have not conducted credit enquiries on the financial status of any tenants.
We have, however, reflected our general understanding of purchasers' likely
perceptions of the financial status of tenants.
Valuation Assumptions
Introduction An Assumption is defined in the Red Book Glossary and VPS 4 to be a
"supposition taken to be true" (an "Assumption").
Assumptions are facts, conditions or situations affecting the subject of, or
approach to, a valuation that it has been agreed need not be verified by the
valuer as part of the valuation process. Assumptions are made when it is
reasonable for the valuer to accept that something is true without the need
for specific investigation.
The Company has confirmed and we confirm that our Assumptions are correct as
far as the Company and we, respectively, are aware. In the event that any of
these Assumptions prove to be incorrect then our valuations should be
reviewed. The principal Assumptions which we have made are stated within
this Valuation Report.
For the avoidance of doubt, the Assumptions made do not affect compliance with
the approach to Market Value under the Red Book.
Capital Values The Valuation has been prepared on the basis of "Market Value", which is
defined in the Red Book as:
"The estimated amount for which an asset or liability should exchange on the
Valuation Date between a willing buyer and a willing seller in an arm's length
transaction, after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion."
The Valuation represents the figure that would appear in a hypothetical
contract of sale at the Valuation Date. No adjustment has been made to this
figure for any expenses of acquisition or realisation - nor for taxation which
might arise in the event of a disposal.
No account has been taken of any inter-company leases or arrangements, nor of
any mortgages, debentures or other charge.
No account has been taken of the availability or otherwise of capital based
Government or European Community grants.
Taxation, Costs and Realisation Costs As stated above, no allowances have been made for any expenses of realisation
nor for taxation which might arise in the event of a disposal.
Our valuations reflect purchasers' statutory and other normal acquisition
costs.
VAT We have not been advised whether the properties are elected for VAT.
All rents and capital values stated in this Valuation Report are exclusive of
VAT.
Net Annual Rent Net annual rent is defined for the purposes of this transaction as "the
current income or income estimated by the valuer:
(i) ignoring any special receipts or deduction arising from the property;
(ii) excluding Value Added Tax and before taxation (including tax on profits
and any allowances for interest on capital or loans); and
(iii) after making deductions for superior rents (but not for amortisation),
and any disbursements including, if appropriate, expenses of managing the
property and allowances to maintain it in a condition to command its rent".
Estimated Net Annual Rental Value The estimated net annual rental value is based on the current rental value of
each of the Properties. The rental value reflects the terms of the leases
where the Properties, or parts thereof, are let at the date of valuation.
Where the Properties, or parts thereof, are vacant at the date of valuation,
the rental value reflects the rent we consider would be obtainable on an open
market letting as at the date of valuation.
Rental Values Unless stated otherwise rental values indicated in our Valuation Report are
those which have been adopted by us as appropriate in assessing the capital
value and are not necessarily appropriate for other purposes, nor do they
necessarily accord with the definition of Market Rent in the Red Book, which
is as follows:
"The estimated amount for which an interest in real property should be leased
on the Valuation Date between a willing lessor and a willing lessee on
appropriate lease terms in an arm's length transaction, after proper marketing
and where the parties had each acted knowledgeably, prudently and without
compulsion."
Fixtures, Fittings and Equipment Where appropriate we have regarded the shop fronts of retail and showroom
accommodation as forming an integral part of the building.
Landlord's fixtures such as lifts, escalators, central heating and other
normal service installations have been treated as an integral part of the
building and are included within our Valuations.
Process plant and machinery, tenants' fixtures and specialist trade fittings
have been excluded from our Valuations.
All measurements, areas and ages quoted in our Valuation Report are
approximate.
Environmental Matters In the absence of any information to the contrary, we have assumed that:
a) the Property/Properties is/are not contaminated and is not adversely
affected by any existing or proposed environmental law;
b) any processes which are carried out on the Property/Properties which are
regulated by environmental legislation are properly licensed by the
appropriate authorities;
c) in England and Wales, the Property/Properties possesses current Energy
Performance Certificates (EPCs) as required under the Government's Energy
Performance of Buildings Directive - and that they have an energy efficient
standard of 'E', or better. Under the Energy Efficiency (Private Rented
Property) (England and Wales) Regulations 2015 it became unlawful for
landlords to rent out business or residential premise from 1st April 2018 -
unless the site has reached a minimum EPC rating of an 'E', or secured a
relevant exemption. In Scotland, we have assumed that the Property/Properties
possesses current EPCs as required under the Scottish Government's Energy
Performance of Buildings (Scotland) Regulations - and that they meet energy
standards equivalent to those introduced by the 2002 building regulations. The
Assessment of Energy Performance of Non-Domestic Buildings (Scotland)
Regulations 2016 requires building owners to commission an EPC and Action Plan
for sale or new rental of non-domestic buildings bigger than 1,000 sq m that
do not meet 2002 building regulations energy standards. Action Plans contain
building improvement measures that must be implemented within 3.5 years,
subject to certain exemptions;
d) In January 2021 the Government set out proposals in England and Wales for
'improving the energy performance of privately rented homes'. The key tenets
of the proposals are to; reduce emissions; tackle fuel poverty; improve asset
quality; reduce energy bills; enhance energy security; and support associated
employment. The proposals were wide ranging and included new demands on
residential landlords through Energy Performance Certificates ('EPCs').
Existing PRS Regulations set a minimum standard of EPC Band E for residential
units to be lettable. The Government proposals see this threshold being raised
to EPC Band C for all new tenancies created from 01 April 2025 and for all
existing tenancies by 01 April 2028.
The principle for relevant building works is to be 'fabric first' meaning
maximisation of components and materials that make up the building fabric to
enhance, for example, insulation, ventilation and air-tightness. The proposals
also cite; compliance measures and penalties for landlords, letting agents and
local authorities; and affordability support for carrying out necessary works.
The implication was (as with the existing EPC Band E requirement) that private
rented units may effectively be rendered unlettable if they failed to meet or
exceed the minimum EPC requirement.
On 20 September 2023 the Prime Minister announced revisions to the PRS
Regulations such that residential landlords will not be fined if they do not
meet these requirements. It was not specified if this denotes a delay to the
effective fates or the removal of the penalty.
In addition the Prime Minister announced that Boiler Upgrade Scheme subsidies
will be increased from £5,000 to £7,500, and the timeframe for removal of
gas fired boilers delayed until 2035.
The change in policy is more towards incentivising change as opposed to
enforcement.
The UK's Net Zero 2050 pledge is still being upheld although future revisions
are not out of the question, particularly in the event of a potential change
in Government. It is likely that institutional landlords in particular will
continue to target energy efficiency given policy change uncertainty and the
ever increasing focus on ESG; we therefore expect EPC ratings to continue to
be a focus for residential investors and occupiers in the UK
e) the Properties are either not subject to flooding risk or, if it is, that
sufficient flood defences are in place and that appropriate building insurance
could be obtained at a cost that would not materially affect the capital
value; and
f) invasive species such as Japanese Knotweed are not present on the
Properties.
High voltage electrical supply equipment may exist within, or in close
proximity of, the Properties. The National Radiological Protection Board
(NRPB) has advised that there may be a risk, in specified circumstances, to
the health of certain categories of people. Public perception may, therefore,
affect marketability and future value of the Properties. Our Valuation
reflects our current understanding of the market and we have not made a
discount to reflect the presence of this equipment.
Repair and Condition In the absence of any information to the contrary, we have assumed that:
a) there are no abnormal ground conditions, nor archaeological remains,
present which might adversely affect the current or future occupation,
development or value of the Properties;
b) the Properties are free from rot, infestation, structural or latent
defect;
c) no currently known deleterious or hazardous materials or suspect
techniques, including but not limited to Composite Panelling, ACM Cladding,
High Alumina Cement (HAC), Asbestos, Reinforced Autoclaved Aerated Concrete
(Raac), have been used in the construction of, or subsequent alterations or
additions to, the Properties; and
d) the services, and any associated controls or software, are in working order
and free from defect.
We have otherwise had regard to the age and apparent general condition of the
Properties. Comments made in the property details do not purport to express an
opinion about, or advise upon, the condition of uninspected parts and should
not be taken as making an implied representation or statement about such
parts.
Title, Tenure, Lettings, Planning, Taxation and Statutory & Local Unless stated otherwise within this Valuation Report, and in the absence of
Authority Requirements any information to the contrary, we have assumed that:
a) the Properties possess a good and marketable title free from any onerous
or hampering restrictions or conditions;
b) the building has been erected either prior to planning control, or in
accordance with planning permissions, and has the benefit of permanent
planning consents or existing use rights for their current use;
c) the Properties are not adversely affected by town planning or road
proposals;
d) the building complies with all statutory and local authority requirements
including building, fire and health and safety regulations, and that a fire
risk assessment and emergency plan are in place;
e) only minor or inconsequential costs will be incurred if any modifications
or alterations are necessary in order for occupiers of the Properties to
comply with the provisions of the Disability Discrimination Act 1995 (in
Northern Ireland) or the Equality Act 2010 (in the rest of the UK);
f) all rent reviews are upward only and are to be assessed by reference to
full current market rents;
g) there are no tenant's improvements that will materially affect our opinion
of the rent that would be obtained on review or renewal;
h) tenants will meet their obligations under their leases, and are responsible
for insurance, payment of business rates, and all repairs, whether directly or
by means of a service charge;
i) there are no user restrictions or other restrictive covenants in leases
which would adversely affect value;
j) where more than 50% of the floorspace of the Properties is in residential
use, the Landlord and Tenant Act 1987 (the "Act") gives certain rights to
defined residential tenants to acquire the freehold/head leasehold interest in
the Properties. Where this is applicable, we have assumed that necessary
notices have been given to the residential tenants under the provisions of the
Act, and that such tenants have elected not to acquire the freehold/head
leasehold interest. Disposal on the open market is therefore unrestricted;
k) where appropriate, permission to assign the interest being valued herein
would not be withheld by the landlord where required;
l) vacant possession can be given of all accommodation which is unlet or
is let on a service occupancy; and
m) Land Transfer Tax (or the local equivalent) will apply at the rate
currently applicable.
In the UK, Stamp Duty Land Tax (SDLT) in England and Northern Ireland, Land
and Buildings Transaction Tax (LABTT) in Scotland or Land Transaction Tax
(LTT) in Wales, will apply at the rate currently applicable
Appendices
Appendix A: Schedule of Properties as at 31 December 2023
Tetra - Aberdeen Gateway, Aberdeen Freehold Investment
Total - Aberdeen Gateway, Aberdeen Freehold Investment
Roca Limited, Bardon Freehold Investment
Sussex Junction, Bolney Freehold Investment
Emerald Park, Bristol Freehold Investment
Temple Quay, Bristol Freehold Investment
Centrum 260, Burton-Upon-Trent Freehold Investment
Rhenus Logistics Limited, Cannock Freehold Investment
Gatwick Gate units 2A-3E, Crawley Freehold Investment
Phase II, Newtons Court-Worlds, Dartford Freehold Investment
81/85 George Street, Edinburgh Freehold Investment
Gilmore Place, Edinburgh, Edinburgh Freehold Investment
Hillview Place, Exeter Freehold Investment
Cineworld Cinema, Glasgow Freehold Investment
Ocado Distribution Unit, Hatfield Freehold Investment
Rotunda, Kingston Freehold Investment
Aura, Leamington Spa Freehold Investment
Axiom, Leamington Spa Freehold Investment
Integra, Leamington Spa Freehold Investment
Units G&H, Precision Park, Leamington Spa Freehold Investment
Junction 27, Leeds Freehold Investment
Land at Sovereign Square, Leeds Freehold Development
St Georges Retail Park, Leicester Freehold Investment
Craven House, London Freehold Investment
Kantar, London Freehold Investment
X Dock 377, Lutterworth Long Leasehold Investment
Trafford Retail Park, Manchester Freehold Investment
Sainsburys, Marlow Freehold Investment
Central Square, Newcastle Upon Tyne Freehold Investment
The Maldron Hotel, Newcastle Upon Tyne Long Leasehold Investment
TJX Ltd, Newcastle-Under-Lyme Freehold Investment
Ventura Park, Radlett, Radlett Freehold Investment
The White Building, Reading Freehold Investment
B&Q Warehouse, Romford Freehold Investment
Bestway Pharmacy NDC Limited, Stoke-on-Trent Freehold Investment
Dolphin Estate, Sunbury on Thames Freehold Investment
Clipper Logistics Plc, Swadlincote Freehold Investment
Regent Circus, Swindon Freehold Investment
Asda, Regent Close, Torquay Freehold Investment
Appendix B: Market Value of the Properties as at 31 December 2023 split by
property type (100%)
Property Type Market Value
Distribution £383,300,000
Multi-Let Industrial £356,500,000
Retail £26,400,000
Retail Warehousing £149,700,000
Offices £143,600,000
Alternatives £191,550,000
Portfolio Total £1,251,050,000
Appendix C: Market Value of the Properties as at 31 December 2023 split by
property location (100%)
London & South East £561,875,000
Midlands £332,075,000
North East including Yorkshire £97,000,000
North West £47,550,000
South West £108,050,000
Other £104,500,000
Portfolio Total £1,251,050,000
Appendix D: Market Value of the Properties in the course of development as at
31 December 2023 (100%)
Land at Sovereign Square, Leeds The property comprises a forward funding of a Hyatt hotel at Sovereign Square, Market Value on the assumption the development will complete in Q3 2024. £32,150,000
in Leeds city centre.
Estimated Outstanding cost to completion (excluding finance): c.£16,500,000
On completion the property will comprise 305 bed hotel subject to an
operational management agreement.
Assumed completion date - August 2024
Freehold. We have reflected the planning conditions in arriving at our opinion Assumed start of management agreement - September 2024
of value.
Part B - CBRE Valuation Report in respect of BBOX
In respect of:
Portfolio of 84 properties held by Tritax Big Box REIT plc
On behalf of:
the Addressees as set out below
Date of valuation:
31 December 2023
Contents
03 (#_Toc161843479)
04 Valuation Report (#_Toc161843480) (#_Toc161843480)
Introduction (#_Toc161843481) (#_Toc161843481)
Source of Information and Scope of Works (#_Toc161843482) (#_Toc161843482)
Valuation Assumptions (#_Toc161843483) (#_Toc161843483)
05 Appendices (#_Toc161843484) (#_Toc161843484)
Appendix A: Schedule of Properties as at 31 December 2023 (#_Toc161843485)
(#_Toc161843485)
Appendix B: Market Value of the Properties as at 31 December 2023 split by
property type (100%) (#_Toc161843486)
Appendix C: Market Value of the Properties as at 31 December 2023 split by
property location (100%) (#_Toc161843487)
CBRE Limited
Henrietta House
Henrietta Place
London W1G 0NB
Valuation Report
Introduction
Report Date 21 March 2024
Valuation Date 31 December 2023
Addressees Tritax Big Box REIT plc
72 Broadwick Street
London
W1F 9QZ
(hereinafter referred to as "Tritax" or the "Company")
and
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
(in their capacity as sponsor and lead financial adviser to the Company)
and
Akur Limited
66 St James's Street
London
SW1A 1NE
(in their capacity as joint financial adviser to the Company)
and
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London
E14 5JP
(in their capacity as joint financial adviser to the Company)
and
UK Commercial Property REIT Limited
PO Box 255
Trafalgar Court Les Banques
St Peter Port
Channel Islands
GY1 3QL
Guernsey (hereinafter referred to as "UK Commercial Property")
and
N.M. Rothschild & Sons Limited
New Court, St Swithin's Lane
London
EC4N 8AL
(in their capacity as lead financial adviser to UK Commercial Property)
and
Numis Securities Limited (trading as Deutsche Numis)
45 Gresham Street
London
EC2V 7BF
(in their capacity as joint financial adviser to UK Commercial Property)
(and all the above collectively referred to as "the Addressees")
The Properties 84 properties held by Tritax and its group, as set out in the Schedule of
Properties below in Appendix A (each a "Property" and together the
"Properties").
Instruction To value without re-inspecting the unencumbered freehold and leasehold
interests (as applicable) of the Properties on the basis of Market Value as at
the Valuation Date in accordance with Terms of Engagement entered into between
CBRE Ltd ("CBRE")and the Addressees dated 20 March 2024 (the "Valuation").
Status of Valuer You have instructed us to act as an "external valuer" as defined in the
current version of the RICS Valuation - Global Standards (2022).
Please note that the Valuation may be investigated by the RICS for the
purposes of the administration of the Institution's conduct and disciplinary
regulations in order to ensure compliance with the RICS Valuation - Global
Standards (2022).
Purpose and Basis of Valuation The Valuation has been prepared for a Regulated Purpose as defined in the RICS
Valuation - Global Standards (2022) (incorporating the International Valuation
Standards) and the UK national supplement current as at the Valuation Date
(the "Red Book").
We understand that our valuation report and the Appendices to it (together the
"Valuation Report") are required for inclusion in an announcement to be issued
by the Company in connection with the proposed recommended all-share offer by
the Company for the entire issued and to be issued ordinary share capital of
UK Commercial Property (the "Transaction") pursuant to Rule 2.7 of the City
Code on Takeovers and Mergers (the "Code") (the "Announcement").
This Valuation has been prepared on the basis of Market Value as defined in
the current edition of the RICS Valuation - Global Standards (2022) and in
accordance with the Valuation Assumptions set out below.
The effective date of our Valuation is 31 December 2023 (the "Valuation
Date").
In accordance with the Red Book, we have made certain disclosures in
connection with this valuation instruction and our relationship with the
Addressees.
Market Value of the Properties as at 31 December 2023 (100%) £4,839,625,000 (FOUR BILLION, EIGHT HUNDRED AND THIRTY-NINE MILLION, SIX
HUNDRED AND TWENTY-FIVE THOUSAND POUNDS) exclusive of VAT, as shown in the
Schedule of Capital Values set out below.
For the avoidance of doubt, we have valued the Properties as real estate and
the values reported above represent 100% of the market values of the assets.
There are no negative values to report.
Our opinion of Market Value is based upon the Scope of Work and Valuation
Assumptions attached, and has been primarily derived using comparable recent
market transactions on arm's length terms.
The Properties are split by property type and tenure as follows.
Market Value of Properties held for Investment £4,179,445,000 £531,740,000 £4,711,185,000
(71 Properties) (6 Properties) (77 Properties)
Market Value of Properties in the Course of Development £128,440,000 £0 £128,440,000
( 7 Properties) (Nil Properties) (7 Properties)
Market Value of the Properties as at 31 December 2023 (at share) The Company has advised us that three properties are held on minority (4%)
interests; DHL Skelmersdale, Matalan Knowsley, and Cerealto Worksop.
The total arithmetical apportionment of the value taking into account the
relevant ownership share (as advised to us by the Company) on a pro-rata basis
is as follows:
£4,718,617,000 (FOUR BILLION, SEVEN HUNDRED AND EIGHTEEN MILLION, SIX HUNDRED
AND SEVENTEEN THOUSAND POUNDS) exclusive of VAT.
Where a Property is owned through an indirect investment structure or a joint
tenancy in a trust for sale, our Valuation represents the relevant apportioned
percentage of ownership of the value of the whole Property, assuming full
management control. Our Valuation therefore is unlikely to represent the value
of the interests in the indirect investment structure through which the
property is held.
Report Format Appendix A of this Valuation Report contains the Schedule of Properties.
Appendix B provides a split of the value of the Properties by use type.
Appendix C provides a split of the value of the Properties by location.
Appendix D provides a review of the assets in the course of development.
The Company has expressly instructed us not to disclose certain information
which is considered commercially sensitive, namely the individual values of
the Properties.
Market Conditions We draw your attention to a combination of global inflationary pressures
(leading to higher interest rates) and recent failures/stress in banking
systems which have increased the potential for constrained credit markets,
negative capital value movements and enhanced volatility in property markets
over the short-to-medium term. While there is still liquidity in the market,
ongoing geopolitical uncertainties, economic challenges and the cost and
accessibility of debt finance could further impact pricing.
Experience has shown that consumer and investor behaviour can quickly change
during periods of such heightened volatility. Lending or investment decisions
should reflect this heightened level of volatility and the potential for
deteriorating market conditions.
It is important to note that the conclusions set out in this Valuation Report
are valid as at the Valuation Date only. Where appropriate, we recommend that
the valuation is closely monitored, as we continue to track how markets
respond to evolving events.
Portfolios and Aggregation We have valued the Properties individually and no account has been taken of
any discount or premium that may be negotiated in the market if all or part of
the portfolio was to be marketed simultaneously, either in lots or as a whole.
Valuation Approach for Properties in Course of Development In the case of development valuations, we would draw your attention to the
fact that, even in normal market conditions, the residual method of valuation
is very sensitive to changes in key inputs, with small changes in variables
(such as the timing of the development, finance/construction costs and sales
rates) having a disproportionate effect on land value.
Consequently, in reference to the Market Conditions section above it is
inevitable that there is even greater uncertainty in respect of development
valuations, with site values being susceptible to much more variance than
normal.
Building Contracts Current supply issues associated with some building material shortages are
impacting on construction costs and timing.
Unexecuted construction / building contracts may be subject to price increases
and executed contracts may contain conditions which allow the builder to pass
on any increases to the instructing party.
We recommend you obtain appropriate advice to confirm there are no adverse
conditions within the final construction/building contract and/or ensure there
are additional funds available to cover potential cost escalations.
Rising building costs and shortages of labour and materials may also affect
the builder`s viability and/or ability to meet construction timeframes. In
this climate, we strongly recommend you verify the experience and financial
capability of the builder to complete the project on time and on budget.
Caution is advised in this regard.
In the absence of any information to the contrary, we have assumed that the
construction contract and any warranties will be assignable.
Construction Cost Volatility Material costs, labour costs and supply chains are unusually volatile with the
market experiencing price increases in some, or all of these areas during 2022
and continuing into 2023. This has created significant uncertainty in cost
estimates, which is likely to continue. In addition, there are significant
risks that delays may be encountered in sourcing materials and labour, and as
such, delivery risks are also heightened in this climate.
Furthermore, the likelihood of ongoing cost escalations and sourcing delays is
high. This may place additional pressure on both the developer's and builder's
profit margins and development viability.
These inherent risks should therefore be given careful consideration in
lending and investment decisions. Caution is advised in this regard.
Compliance with Valuation Standards The Valuation has been prepared in accordance with the latest version of the
RICS Valuation - Global Standards (2022), incorporating the International
Valuation Standards, and the UK national supplement (the "Red Book") current
as the Valuation Date.
We confirm that the valuations have been prepared in accordance with the
requirements of Rule 29 of the Code.
The
Prop
erti
es
have
been
valu
ed
by
valu
ers
who
are
appr
opri
atel
y
and
prof
essi
onal
ly
qual
ifie
d,
suit
ably
expe
rien
ced
and
inde
pend
ent
of
the
Comp
any
and
UK
Comm
erci
al
Prop
erty
and
have
the
appr
opri
ate
comp
eten
ces
for
the
purp
ose
of
the
Valu
atio
n in
acco
rdan
ce
with
the
Red
Book
and
Rule
29.3
(a)
(ii)
and
(iii
) of
the
Code
.
We
conf
irm
that
we
have
suff
icie
nt
and
curr
ent
loca
l
and
nati
onal
know
ledg
e of
the
part
icul
ar
prop
erty
mark
et
invo
lved
and
have
the
nece
ssar
y
skil
ls
and
unde
rsta
ndin
g to
unde
rtak
e
the
Valu
atio
n
comp
eten
tly.
Wher
e
the
know
ledg
e
and
skil
l
requ
irem
ents
of
the
Red
Book
have
been
met
in
aggr
egat
e by
more
than
one
valu
er
with
in
CBRE
, we
conf
irm
that
a
list
of
thos
e
valu
ers
has
been
reta
ined
with
in
the
work
ing
pape
rs,
toge
ther
with
conf
irma
tion
that
each
name
d
valu
er
comp
lies
with
the
requ
irem
ents
of
the
Red
Book
.
This
Valu
atio
n is
a
prof
essi
onal
opin
ion
and
is
expr
essl
y
not
inte
nded
to
serv
e as
a
warr
anty
,
assu
ranc
e or
guar
ante
e of
any
part
icul
ar
valu
e of
the
subj
ect
Prop
erti
es.
Othe
r
valu
ers
may
reac
h
diff
eren
t
conc
lusi
ons
as
to
the
valu
e of
the
subj
ect
Prop
erti
es.
This
Valu
atio
n is
for
the
sole
purp
ose
of
prov
idin
g
the
inte
nded
user
with
the
valu
er's
inde
pend
ent
prof
essi
onal
opin
ion
of
the
valu
e of
the
subj
ect
Prop
erti
es
as
at
the
Valu
atio
n
Date
.
Sustainability Considerations Wherever appropriate, sustainability and environmental matters are an integral
part of the valuation approach. 'Sustainability' is taken to mean the
consideration of such matters as environment and climate change, health and
well-being and corporate responsibility that can or do impact on the valuation
of an asset. In a valuation context, sustainability encompasses a wide range
of physical, social, environmental, and economic factors that can affect
value. The range of issues includes key environmental risks, such as flooding,
energy efficiency and climate, as well as matters of design, configuration,
accessibility, legislation, management, and fiscal considerations - and
current and historic land use.
Sustainability has an impact on the value of an asset, even if not explicitly
recognised. Valuers reflect markets, they do not lead them. Where we recognise
the value impacts of sustainability, we are reflecting our understanding of
how market participants include sustainability requirements in their bids and
the impact on market valuations.
Climate Risk Legislation From June 2019, the Climate Change Act 2008 (2050 Target Amendment) Order 2019
commits the UK Government to reducing greenhouse gas emissions by 100% from
1990 levels (i.e. a Net Zero position) by 2050. In 2021 an interim target was
set, to reduce emissions by 78% by 2035, by decarbonising electricity
generation. This means that fossil fuels used in building, such as natural
gas for heating, are incompatible with this commitment. The proposal to update
the Minimum Energy Efficiency Standards, to require all non-domestic
properties to a minimum EPC rating of B in 2030 has not been ratified and in
the absence of any commentary from the current administration, we assume
landlords will continue to work towards this target.
We also note that the UK's introduction of mandatory climate related
disclosures (reporting climate risks and opportunities consistent with
recommendations by the "Task Force for Climate Related Financial Disclosure"
(TCFD)), including the assessment of so-called physical and transition climate
risks, will potentially have an impact on how the market views such risks and
incorporates them into the sale of letting of assets.
The European Union's "Sustainable Finance Disclosure Regulations" (SFDR) may
impact on UK asset values due to the requirements in reporting to European
investors.
Assumptions The Property details on which each Valuation is based are as set out in this
Valuation Report. We have made various assumptions as to tenure, letting,
taxation, town planning, and the condition and repair of buildings and sites -
including ground and groundwater contamination - as set out below.
If any of the information or assumptions on which the Valuation is based are
subsequently found to be incorrect, the Valuation figures may also be
incorrect and should be reconsidered.
Variations and/or None.
Departures from
Standard Assumptions
Independence The total annual fees, including the fee for this assignment, earned by CBRE
(or other companies forming part of the same group of companies within the UK)
from Tritax Big Box REIT plc (or other companies forming part of the same
group of companies) is less than 5.0% of the CBRE group's total annual UK
revenues.
It is not anticipated this situation will vary in the financial year to 31
December 2024.
We confirm that neither the valuers concerned nor CBRE have any personal
interest in the Company, UK Commercial Property, any of the Properties or in
the outcome of the Valuation.
Previous Involvement and Conflicts of Interest We confirm that we have valued the Properties on behalf of the Company on a
six monthly basis for financial reporting purposes for in excess of 10 years,
the most recent valuation being 31 December 2023.
From time to time, CBRE provides agency or professional services to the
Company.
We do not consider that this previous involvement represents a conflict of
interest and you have confirmed to us that it also considers this to be the
case.
CBRE are also instructed to value the UK Commercial Property portfolio for UK
Commercial Property on a quarterly basis for financial reporting purposes, and
have been in excess of ten years, the most recent valuation being 31 December
2023. CBRE have also been engaged by the Addressees to value the UK
Commercial Property portfolio for the purposes of the present transaction.
We have put in place information barriers between the valuers of the Tritax
Properties and the valuers of the UK Commercial Property portfolio. The Panel
have confirmed to you that CBRE acting with these barriers in place is
acceptable for the purpose of this Valuation. You have confirmed to us the
same.
We confirm that we are not aware of any further conflicts of interest that
would prevent us from exercising the required levels of independency and
objectivity in undertaking the Valuation.
Copies of our conflict of interest checks have been retained within the
working papers.
Disclosure The principal signatory of this Valuation Report has not been the signatory of
valuations for the Company prior to this instruction.
The secondary signatory of this Valuation Report has continuously been the
signatory of valuations for the Company since December 2022.
CBRE has continuously been carrying out valuation instructions for the Company
for in excess of 10 years.
CBRE has carried out valuation, agency and professional services on behalf of
the Company for in excess of 10 years.
Responsibility We are responsible for this Valuation Report and accept responsibility for the
information contained in this Valuation Report and confirm that to the best of
our knowledge (having taken all reasonable care to ensure that such is the
case) the information contained in this Valuation Report is in accordance with
the facts and this Valuation Report makes no omissions likely to affect its
import.
Save for any responsibility arising under the Code to any person as and to the
extent there provided, to the fullest extent permitted by law we do not assume
any responsibility and will not accept any liability to any other person for
any loss suffered by any such other person as a result of, arising out of, or
in accordance with this Valuation Report or our statement above.
Reliance Save as set out in "Responsibility" above, the contents of this Valuation
Report may only be relied upon by:
iii) Addressees of the Valuation Report; and
iv) Parties who have received prior written consent from CBRE in the
form of a reliance letter;
for the specific purpose set out herein and no responsibility is accepted to
any third party for the whole or any part of its contents.
No reliance may be placed upon the contents of this Valuation Report by any
party for any purpose other than in connection with the Purpose of the
Valuation.
Publication We understand that this Valuation Report will also require to be put on public
display on the websites of the Company and UK Commercial Property in
accordance with Rules 26.3 and 29.4 of the Code.
Neither the whole nor any part of our Valuation Report nor any references
thereto may be included in any published document, circular or statement nor
published in any way without our prior written approval of the form and
context in which it will appear.
Such publication of, or reference to this Valuation Report will not be
permitted unless it contains a sufficient contemporaneous reference to any
departure from the Red Book or the incorporation of the special assumptions
referred to herein.
Yours faithfully Yours faithfully
Nick Butler Ben Thomas
BSc (Hons) MRICS BSc (Hons) MRICS
Executive Director Senior Director
RICS Registered Valuer RICS Registered Valuer
For and on behalf of CBRE Limited For and on behalf of CBRE Limited
+44 2071822526 +44 2071822662
Nick.Butler@cbre.com Ben.Thomas@cbre.com
Market Value of the Properties as at 31 December 2023 (at share)
The Company has advised us that three properties are held on minority (4%)
interests; DHL Skelmersdale, Matalan Knowsley, and Cerealto Worksop.
The total arithmetical apportionment of the value taking into account the
relevant ownership share (as advised to us by the Company) on a pro-rata basis
is as follows:
£4,718,617,000 (FOUR BILLION, SEVEN HUNDRED AND EIGHTEEN MILLION, SIX HUNDRED
AND SEVENTEEN THOUSAND POUNDS) exclusive of VAT.
Where a Property is owned through an indirect investment structure or a joint
tenancy in a trust for sale, our Valuation represents the relevant apportioned
percentage of ownership of the value of the whole Property, assuming full
management control. Our Valuation therefore is unlikely to represent the value
of the interests in the indirect investment structure through which the
property is held.
Report Format
Appendix A of this Valuation Report contains the Schedule of Properties.
Appendix B provides a split of the value of the Properties by use type.
Appendix C provides a split of the value of the Properties by location.
Appendix D provides a review of the assets in the course of development.
The Company has expressly instructed us not to disclose certain information
which is considered commercially sensitive, namely the individual values of
the Properties.
Market Conditions
We draw your attention to a combination of global inflationary pressures
(leading to higher interest rates) and recent failures/stress in banking
systems which have increased the potential for constrained credit markets,
negative capital value movements and enhanced volatility in property markets
over the short-to-medium term. While there is still liquidity in the market,
ongoing geopolitical uncertainties, economic challenges and the cost and
accessibility of debt finance could further impact pricing.
Experience has shown that consumer and investor behaviour can quickly change
during periods of such heightened volatility. Lending or investment decisions
should reflect this heightened level of volatility and the potential for
deteriorating market conditions.
It is important to note that the conclusions set out in this Valuation Report
are valid as at the Valuation Date only. Where appropriate, we recommend that
the valuation is closely monitored, as we continue to track how markets
respond to evolving events.
Portfolios and Aggregation
We have valued the Properties individually and no account has been taken of
any discount or premium that may be negotiated in the market if all or part of
the portfolio was to be marketed simultaneously, either in lots or as a whole.
Valuation Approach for Properties in Course of Development
In the case of development valuations, we would draw your attention to the
fact that, even in normal market conditions, the residual method of valuation
is very sensitive to changes in key inputs, with small changes in variables
(such as the timing of the development, finance/construction costs and sales
rates) having a disproportionate effect on land value.
Consequently, in reference to the Market Conditions section above it is
inevitable that there is even greater uncertainty in respect of development
valuations, with site values being susceptible to much more variance than
normal.
Building Contracts
Current supply issues associated with some building material shortages are
impacting on construction costs and timing.
Unexecuted construction / building contracts may be subject to price increases
and executed contracts may contain conditions which allow the builder to pass
on any increases to the instructing party.
We recommend you obtain appropriate advice to confirm there are no adverse
conditions within the final construction/building contract and/or ensure there
are additional funds available to cover potential cost escalations.
Rising building costs and shortages of labour and materials may also affect
the builder`s viability and/or ability to meet construction timeframes. In
this climate, we strongly recommend you verify the experience and financial
capability of the builder to complete the project on time and on budget.
Caution is advised in this regard.
In the absence of any information to the contrary, we have assumed that the
construction contract and any warranties will be assignable.
Construction Cost Volatility
Material costs, labour costs and supply chains are unusually volatile with the
market experiencing price increases in some, or all of these areas during 2022
and continuing into 2023. This has created significant uncertainty in cost
estimates, which is likely to continue. In addition, there are significant
risks that delays may be encountered in sourcing materials and labour, and as
such, delivery risks are also heightened in this climate.
Furthermore, the likelihood of ongoing cost escalations and sourcing delays is
high. This may place additional pressure on both the developer's and builder's
profit margins and development viability.
These inherent risks should therefore be given careful consideration in
lending and investment decisions. Caution is advised in this regard.
Compliance with Valuation Standards
The Valuation has been prepared in accordance with the latest version of the
RICS Valuation - Global Standards (2022), incorporating the International
Valuation Standards, and the UK national supplement (the "Red Book") current
as the Valuation Date.
We confirm that the valuations have been prepared in accordance with the
requirements of Rule 29 of the Code.
The Properties have been valued by valuers who are appropriately and
professionally qualified, suitably experienced and independent of the Company
and UK Commercial Property and have the appropriate competences for the
purpose of the Valuation in accordance with the Red Book and Rule 29.3 (a)
(ii) and (iii) of the Code. We confirm that we have sufficient and current
local and national knowledge of the particular property market involved and
have the necessary skills and understanding to undertake the Valuation
competently.
Where the knowledge and skill requirements of the Red Book have been met in
aggregate by more than one valuer within CBRE, we confirm that a list of those
valuers has been retained within the working papers, together with
confirmation that each named valuer complies with the requirements of the Red
Book.
This Valuation is a professional opinion and is expressly not intended to
serve as a warranty, assurance or guarantee of any particular value of the
subject Properties. Other valuers may reach different conclusions as to the
value of the subject Properties. This Valuation is for the sole purpose of
providing the intended user with the valuer's independent professional opinion
of the value of the subject Properties as at the Valuation Date.
Sustainability Considerations
Wherever appropriate, sustainability and environmental matters are an integral
part of the valuation approach. 'Sustainability' is taken to mean the
consideration of such matters as environment and climate change, health and
well-being and corporate responsibility that can or do impact on the valuation
of an asset. In a valuation context, sustainability encompasses a wide range
of physical, social, environmental, and economic factors that can affect
value. The range of issues includes key environmental risks, such as flooding,
energy efficiency and climate, as well as matters of design, configuration,
accessibility, legislation, management, and fiscal considerations - and
current and historic land use.
Sustainability has an impact on the value of an asset, even if not explicitly
recognised. Valuers reflect markets, they do not lead them. Where we recognise
the value impacts of sustainability, we are reflecting our understanding of
how market participants include sustainability requirements in their bids and
the impact on market valuations.
Climate Risk Legislation
From June 2019, the Climate Change Act 2008 (2050 Target Amendment) Order 2019
commits the UK Government to reducing greenhouse gas emissions by 100% from
1990 levels (i.e. a Net Zero position) by 2050. In 2021 an interim target was
set, to reduce emissions by 78% by 2035, by decarbonising electricity
generation. This means that fossil fuels used in building, such as natural
gas for heating, are incompatible with this commitment. The proposal to update
the Minimum Energy Efficiency Standards, to require all non-domestic
properties to a minimum EPC rating of B in 2030 has not been ratified and in
the absence of any commentary from the current administration, we assume
landlords will continue to work towards this target.
We also note that the UK's introduction of mandatory climate related
disclosures (reporting climate risks and opportunities consistent with
recommendations by the "Task Force for Climate Related Financial Disclosure"
(TCFD)), including the assessment of so-called physical and transition climate
risks, will potentially have an impact on how the market views such risks and
incorporates them into the sale of letting of assets.
The European Union's "Sustainable Finance Disclosure Regulations" (SFDR) may
impact on UK asset values due to the requirements in reporting to European
investors.
Assumptions
The Property details on which each Valuation is based are as set out in this
Valuation Report. We have made various assumptions as to tenure, letting,
taxation, town planning, and the condition and repair of buildings and sites -
including ground and groundwater contamination - as set out below.
If any of the information or assumptions on which the Valuation is based are
subsequently found to be incorrect, the Valuation figures may also be
incorrect and should be reconsidered.
Variations and/or
Departures from
Standard Assumptions
None.
Independence
The total annual fees, including the fee for this assignment, earned by CBRE
(or other companies forming part of the same group of companies within the UK)
from Tritax Big Box REIT plc (or other companies forming part of the same
group of companies) is less than 5.0% of the CBRE group's total annual UK
revenues.
It is not anticipated this situation will vary in the financial year to 31
December 2024.
We confirm that neither the valuers concerned nor CBRE have any personal
interest in the Company, UK Commercial Property, any of the Properties or in
the outcome of the Valuation.
Previous Involvement and Conflicts of Interest
We confirm that we have valued the Properties on behalf of the Company on a
six monthly basis for financial reporting purposes for in excess of 10 years,
the most recent valuation being 31 December 2023.
From time to time, CBRE provides agency or professional services to the
Company.
We do not consider that this previous involvement represents a conflict of
interest and you have confirmed to us that it also considers this to be the
case.
CBRE are also instructed to value the UK Commercial Property portfolio for UK
Commercial Property on a quarterly basis for financial reporting purposes, and
have been in excess of ten years, the most recent valuation being 31 December
2023. CBRE have also been engaged by the Addressees to value the UK
Commercial Property portfolio for the purposes of the present transaction.
We have put in place information barriers between the valuers of the Tritax
Properties and the valuers of the UK Commercial Property portfolio. The Panel
have confirmed to you that CBRE acting with these barriers in place is
acceptable for the purpose of this Valuation. You have confirmed to us the
same.
We confirm that we are not aware of any further conflicts of interest that
would prevent us from exercising the required levels of independency and
objectivity in undertaking the Valuation.
Copies of our conflict of interest checks have been retained within the
working papers.
Disclosure
The principal signatory of this Valuation Report has not been the signatory of
valuations for the Company prior to this instruction.
The secondary signatory of this Valuation Report has continuously been the
signatory of valuations for the Company since December 2022.
CBRE has continuously been carrying out valuation instructions for the Company
for in excess of 10 years.
CBRE has carried out valuation, agency and professional services on behalf of
the Company for in excess of 10 years.
Responsibility
We are responsible for this Valuation Report and accept responsibility for the
information contained in this Valuation Report and confirm that to the best of
our knowledge (having taken all reasonable care to ensure that such is the
case) the information contained in this Valuation Report is in accordance with
the facts and this Valuation Report makes no omissions likely to affect its
import.
Save for any responsibility arising under the Code to any person as and to the
extent there provided, to the fullest extent permitted by law we do not assume
any responsibility and will not accept any liability to any other person for
any loss suffered by any such other person as a result of, arising out of, or
in accordance with this Valuation Report or our statement above.
Reliance
Save as set out in "Responsibility" above, the contents of this Valuation
Report may only be relied upon by:
iii) Addressees of the Valuation Report; and
iv) Parties who have received prior written consent from CBRE in the
form of a reliance letter;
for the specific purpose set out herein and no responsibility is accepted to
any third party for the whole or any part of its contents.
No reliance may be placed upon the contents of this Valuation Report by any
party for any purpose other than in connection with the Purpose of the
Valuation.
Publication
We understand that this Valuation Report will also require to be put on public
display on the websites of the Company and UK Commercial Property in
accordance with Rules 26.3 and 29.4 of the Code.
Neither the whole nor any part of our Valuation Report nor any references
thereto may be included in any published document, circular or statement nor
published in any way without our prior written approval of the form and
context in which it will appear.
Such publication of, or reference to this Valuation Report will not be
permitted unless it contains a sufficient contemporaneous reference to any
departure from the Red Book or the incorporation of the special assumptions
referred to herein.
Yours faithfully
Nick Butler
BSc (Hons) MRICS
Executive Director
RICS Registered Valuer
For and on behalf of CBRE Limited
+44 2071822526
Nick.Butler@cbre.com
Yours faithfully
Ben Thomas
BSc (Hons) MRICS
Senior Director
RICS Registered Valuer
For and on behalf of CBRE Limited
+44 2071822662
Ben.Thomas@cbre.com
Source of Information and Scope of Works
Sources of Information We have carried out our work based upon information supplied to us by the
Company and their professional advisors, as set out within this Valuation
Report, which we have assumed to be correct and comprehensive,
including;
· Tenancy and asset management update document for the properties held
for investment named TBBR AM - FY 2023 and received on 29 November 2023
· Information update pack for the assets in the course of development
named CBRE Development Summary for Info dated November 2023 and received on 7
November 2023
· Detailed cost plans, build summaries, timescales and business plans
for the assets in the course of development, downloaded from a Tritax Symmetry
Share Point site on 01 December 2023
· For new acquisitions, we generally receive due diligence reports,
including measured surveys, technical and environmental reports.
The Properties Our Valuation Report contains a brief summary of the Property details on which
our Valuation has been based.
You have expressly instructed us not to disclose certain information which is
considered by the Company to be commercially sensitive, namely the individual
values of the Properties.
Inspection As part of our Valuation instruction from the Company for financial reporting
purposes, the majority of the Properties have been subject to internal
inspections on a three year rolling basis. As instructed, we re-inspected 48
of the 84 Properties for the purpose of this Valuation.
With regard to those Properties which have not been subject to re-inspection,
the Company has confirmed that they are not aware of any material changes to
the physical attributes of the Properties, or the nature of their location,
since the last inspection. We have assumed this advice to be correct.
Where Properties have not been re-inspected, the valuer will not carry out the
usual range of enquiries performed during a full inspection of these
Properties and will make the appropriate assumptions based on the information
provided or available that, without a full inspection, cannot be verified. The
instructing parties acknowledge and accept the heightened and inherent
uncertainty and risks relying upon a valuation prepared on a desktop basis.
Areas We have not measured the Properties but have relied upon the floor areas
provided to us by you or your professional advisors, which we have assumed to
be correct and comprehensive, and which you have advised us have been
calculated using the: Gross Internal Area (GIA), Net Internal Area (NIA) or
International Property Measurement Standard (IPMS) 3 - Office, measurement
methodology as set out in the latest edition of the RICS Property Measurement
Standards.
Environmental Considerations We have not been instructed to make any investigations in relation to the
presence or potential presence of contamination in land or buildings or the
potential presence of other environmental risk factors and to assume that if
investigations were made to an appropriate extent then nothing would be
discovered sufficient to affect value.
We have not carried out investigation into past uses, either of the property
or of any adjacent lands, to establish whether there is any potential for
contamination from such uses or sites, or other environmental risk factors and
have therefore assumed that none exists.
Sustainability Considerations In carrying out this Valuation, we have considered the impact of
sustainability factors on the value of the Property. Based on our
inspections and our review of the information that was available to us, we
have not identified any risk factors which, in our opinion, would affect
value. However, CBRE gives no warranty as to the absence of such risk
factors in relation to sustainability.
Services and Amenities We understand that the Properties are located in an area served by mains gas,
electricity, water and drainage.
None of the services have been tested by us.
Enquiries regarding the availability of utilities/services to the development
schemes are outside the scope of our Valuation Report.
Repair and Condition We have not carried out building surveys, tested services, made independent
site investigations, inspected woodwork, exposed parts of the structure which
were covered, unexposed or inaccessible, nor arranged for any investigations
to be carried out to determine whether or not any deleterious or hazardous
materials or techniques have been used, or are present, in any part of the
Properties. We are unable, therefore, to give any assurance that the
Properties are free from defect.
Town Planning We have not undertaken planning enquiries.
Titles, Tenures and Lettings Details of title/tenure under which the Properties are held and of lettings to
which it is subject are as supplied to us. We have not generally examined nor
had access to all the deeds, leases or other documents relating thereto. Where
information from deeds, leases or other documents is recorded in this
Valuation Report, it represents our understanding of the relevant documents.
We should emphasise, however, that the interpretation of the documents of
title (including relevant deeds, leases and planning consents) is the
responsibility of your legal adviser.
We have not conducted credit enquiries on the financial status of any tenants.
We have, however, reflected our general understanding of purchasers' likely
perceptions of the financial status of tenants.
Valuation Assumptions
Introduction An Assumption is defined in the Red Book Glossary and VPS 4 to be a
"supposition taken to be true" (an "Assumption").
Assumptions are facts, conditions or situations affecting the subject of, or
approach to, a valuation that it has been agreed need not be verified by the
valuer as part of the valuation process. Assumptions are made when it is
reasonable for the valuer to accept that something is true without the need
for specific investigation.
The Company has confirmed and we confirm that our Assumptions are correct as
far as the Company and we, respectively, are aware. In the event that any of
these Assumptions prove to be incorrect then our valuations should be
reviewed. The principal Assumptions which we have made are stated within
this Valuation Report.
For the avoidance of doubt, the Assumptions made do not affect compliance with
the approach to Market Value under the Red Book.
Capital Values The Valuation has been prepared on the basis of "Market Value", which is
defined in the Red Book as:
"The estimated amount for which an asset or liability should exchange on the
Valuation Date between a willing buyer and a willing seller in an arm's length
transaction, after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion."
The Valuation represents the figure that would appear in a hypothetical
contract of sale at the Valuation Date. No adjustment has been made to this
figure for any expenses of acquisition or realisation - nor for taxation which
might arise in the event of a disposal.
No account has been taken of any inter-company leases or arrangements, nor of
any mortgages, debentures or other charge.
No account has been taken of the availability or otherwise of capital based
Government or European Community grants.
Taxation, Costs and Realisation Costs As stated above, no allowances have been made for any expenses of realisation
nor for taxation which might arise in the event of a disposal.
Our valuations reflect purchasers' statutory and other normal acquisition
costs.
VAT We have not been advised whether the properties are elected for VAT.
All rents and capital values stated in this Valuation Report are exclusive of
VAT.
Net Annual Rent Net annual rent is defined for the purposes of this transaction as "the
current income or income estimated by the valuer:
(i) ignoring any special receipts or deduction arising from the property;
(ii) excluding Value Added Tax and before taxation (including tax on profits
and any allowances for interest on capital or loans); and
(iii) after making deductions for superior rents (but not for amortisation),
and any disbursements including, if appropriate, expenses of managing the
property and allowances to maintain it in a condition to command its rent".
Estimated Net Annual Rental Value The estimated net annual rental value is based on the current rental value of
each of the Properties. The rental value reflects the terms of the leases
where the Properties, or parts thereof, are let at the date of valuation.
Where the Properties, or parts thereof, are vacant at the date of valuation,
the rental value reflects the rent we consider would be obtainable on an open
market letting as at the date of valuation.
Rental Values Unless stated otherwise rental values indicated in our Valuation Report are
those which have been adopted by us as appropriate in assessing the capital
value and are not necessarily appropriate for other purposes, nor do they
necessarily accord with the definition of Market Rent in the Red Book, which
is as follows:
"The estimated amount for which an interest in real property should be leased
on the Valuation Date between a willing lessor and a willing lessee on
appropriate lease terms in an arm's length transaction, after proper marketing
and where the parties had each acted knowledgeably, prudently and without
compulsion."
Fixtures, Fittings and Equipment Where appropriate we have regarded the shop fronts of retail and showroom
accommodation as forming an integral part of the building.
Landlord's fixtures such as lifts, escalators, central heating and other
normal service installations have been treated as an integral part of the
building and are included within our Valuations.
Process plant and machinery, tenants' fixtures and specialist trade fittings
have been excluded from our Valuations.
All measurements, areas and ages quoted in our Valuation Report are
approximate.
Environmental Matters In the absence of any information to the contrary, we have assumed that:
g) the Property/Properties is/are not contaminated and is not adversely
affected by any existing or proposed environmental law;
h) any processes which are carried out on the Property/Properties which are
regulated by environmental legislation are properly licensed by the
appropriate authorities;
i) in England and Wales, the Property/Properties possesses current Energy
Performance Certificates (EPCs) as required under the Government's Energy
Performance of Buildings Directive - and that they have an energy efficient
standard of 'E', or better. Under the Energy Efficiency (Private Rented
Property) (England and Wales) Regulations 2015 it became unlawful for
landlords to rent out business or residential premise from 1st April 2018 -
unless the site has reached a minimum EPC rating of an 'E', or secured a
relevant exemption. In Scotland, we have assumed that the Property/Properties
possesses current EPCs as required under the Scottish Government's Energy
Performance of Buildings (Scotland) Regulations - and that they meet energy
standards equivalent to those introduced by the 2002 building regulations. The
Assessment of Energy Performance of Non-Domestic Buildings (Scotland)
Regulations 2016 requires building owners to commission an EPC and Action Plan
for sale or new rental of non-domestic buildings bigger than 1,000 sq m that
do not meet 2002 building regulations energy standards. Action Plans contain
building improvement measures that must be implemented within 3.5 years,
subject to certain exemptions;
j) In January 2021 the Government set out proposals in England and Wales for
'improving the energy performance of privately rented homes'. The key tenets
of the proposals are to; reduce emissions; tackle fuel poverty; improve asset
quality; reduce energy bills; enhance energy security; and support associated
employment. The proposals were wide ranging and included new demands on
residential landlords through Energy Performance Certificates ('EPCs').
Existing PRS Regulations set a minimum standard of EPC Band E for residential
units to be lettable. The Government proposals see this threshold being raised
to EPC Band C for all new tenancies created from 01 April 2025 and for all
existing tenancies by 01 April 2028.
The principle for relevant building works is to be 'fabric first' meaning
maximisation of components and materials that make up the building fabric to
enhance, for example, insulation, ventilation and air-tightness. The proposals
also cite; compliance measures and penalties for landlords, letting agents and
local authorities; and affordability support for carrying out necessary works.
The implication was (as with the existing EPC Band E requirement) that private
rented units may effectively be rendered unlettable if they failed to meet or
exceed the minimum EPC requirement.
On 20 September 2023 the Prime Minister announced revisions to the PRS
Regulations such that residential landlords will not be fined if they do not
meet these requirements. It was not specified if this denotes a delay to the
effective fates or the removal of the penalty.
In addition the Prime Minister announced that Boiler Upgrade Scheme subsidies
will be increased from £5,000 to £7,500, and the timeframe for removal of
gas fired boilers delayed until 2035.
The change in policy is more towards incentivising change as opposed to
enforcement.
The UK's Net Zero 2050 pledge is still being upheld although future revisions
are not out of the question, particularly in the event of a potential change
in Government. It is likely that institutional landlords in particular will
continue to target energy efficiency given policy change uncertainty and the
ever increasing focus on ESG; we therefore expect EPC ratings to continue to
be a focus for residential investors and occupiers in the UK
k) the Properties are either not subject to flooding risk or, if it is, that
sufficient flood defences are in place and that appropriate building insurance
could be obtained at a cost that would not materially affect the capital
value; and
l) invasive species such as Japanese Knotweed are not present on the
Properties.
High voltage electrical supply equipment may exist within, or in close
proximity of, the Properties. The National Radiological Protection Board
(NRPB) has advised that there may be a risk, in specified circumstances, to
the health of certain categories of people. Public perception may, therefore,
affect marketability and future value of the Properties. Our Valuation
reflects our current understanding of the market and we have not made a
discount to reflect the presence of this equipment.
Repair and Condition In the absence of any information to the contrary, we have assumed that:
e) there are no abnormal ground conditions, nor archaeological remains,
present which might adversely affect the current or future occupation,
development or value of the Properties;
f) the Properties are free from rot, infestation, structural or latent
defect;
g) no currently known deleterious or hazardous materials or suspect
techniques, including but not limited to Composite Panelling, ACM Cladding,
High Alumina Cement (HAC), Asbestos, Reinforced Autoclaved Aerated Concrete
(Raac), have been used in the construction of, or subsequent alterations or
additions to, the Properties; and
h) the services, and any associated controls or software, are in working order
and free from defect.
We have otherwise had regard to the age and apparent general condition of the
Properties. Comments made in the property details do not purport to express an
opinion about, or advise upon, the condition of uninspected parts and should
not be taken as making an implied representation or statement about such
parts.
Title, Tenure, Lettings, Planning, Taxation and Statutory & Local Unless stated otherwise within this Valuation Report, and in the absence of
Authority Requirements any information to the contrary, we have assumed that:
n) the Properties possess a good and marketable title free from any onerous or
hampering restrictions or conditions;
o) the building has been erected either prior to planning control, or in
accordance with planning permissions, and has the benefit of permanent
planning consents or existing use rights for their current use;
p) the Properties are not adversely affected by town planning or road
proposals;
q) the building complies with all statutory and local authority requirements
including building, fire and health and safety regulations, and that a fire
risk assessment and emergency plan are in place;
r) only minor or inconsequential costs will be incurred if any modifications
or alterations are necessary in order for occupiers of the Properties to
comply with the provisions of the Disability Discrimination Act 1995 (in
Northern Ireland) or the Equality Act 2010 (in the rest of the UK);
s) all rent reviews are upward only and are to be assessed by reference to
full current market rents;
t) there are no tenant's improvements that will materially affect our
opinion of the rent that would be obtained on review or renewal;
u) tenants will meet their obligations under their leases, and are responsible
for insurance, payment of business rates, and all repairs, whether directly or
by means of a service charge;
v) there are no user restrictions or other restrictive covenants in leases
which would adversely affect value;
w) where more than 50% of the floorspace of the Properties is in residential
use, the Landlord and Tenant Act 1987 (the "Act") gives certain rights to
defined residential tenants to acquire the freehold/head leasehold interest in
the Properties. Where this is applicable, we have assumed that necessary
notices have been given to the residential tenants under the provisions of the
Act, and that such tenants have elected not to acquire the freehold/head
leasehold interest. Disposal on the open market is therefore unrestricted;
x) where appropriate, permission to assign the interest being valued herein
would not be withheld by the landlord where required;
y) vacant possession can be given of all accommodation which is unlet or is
let on a service occupancy; and
z) Land Transfer Tax (or the local equivalent) will apply at the rate
currently applicable.
In the UK, Stamp Duty Land Tax (SDLT) in England and Northern Ireland, Land
and Buildings Transaction Tax (LABTT) in Scotland or Land Transaction Tax
(LTT) in Wales, will apply at the rate currently applicable
Appendices
Appendix A: Schedule of Properties as at 31 December 2023
Marks & Spencer PLC Castle Donnington DE74 2HL Freehold Investment
Sainsbury's Distribution Warehouse Sherburn-in-Elmet LS25 6JH Freehold Investment
Tesco Didcot OX11 7PN Freehold Investment
Morrisons RDC Sittingbourne ME10 2TD Long Leasehold Investment
DHL Supply Chain Limited Skelmersdale WN8 8DY Freehold Investment
Rolls Royce Bognor Regis PO22 9NS Freehold Investment
The Range Doncaster DN8 4HT Freehold Investment
GXO Limited Derby DE65 5BY Freehold Investment
L'Oreal (UK) Ltd Trafford Park, Manchester M17 1ED Freehold Investment
Vacant Stakehill M24 2SJ Freehold Investment
Ocado Erith DA8 1HS Freehold Investment
B&Q Plc Worksop S80 2RZ Freehold Investment
Argos Burton on Trent DE13 8BX Freehold Investment
New Look Retailers Limited Newcastle Under Lyme ST5 9QD Freehold Investment
Brake Bros Ltd Harlow CM19 5TJ Freehold Investment
Dunelm (Soft Furnishings) Ltd Stoke-on-Trent ST4 4EY Freehold Investment
Nice Pak Wigan WN3 4HE Freehold Investment
TK Maxx Wakefield WF11 0AE Freehold Investment
Matalan Retail Limited Knowsley L33 7UF Freehold Investment
Brake Bros Portbury, Bristol BS20 7XN Freehold Investment
Argos Limited Burton on Trent DE13 8BX Freehold Investment
DSG Retail Ltd Newark NG24 2NH Long Leasehold Investment
Gestamp Tallent Ltd Four Ashes, Wolverhampton WV10 7BU Freehold Investment
Amazon UK Services Ltd Peterborough PE2 9EN Freehold Investment
The Kellog Company of Great Britain Ltd Trafford Park, Manchester M32 0YG Freehold Investment
Co-Op Thurrock RM20 3EN Freehold Investment
Euro Car Parts Birch Coppice B78 1SE Long Leasehold Investment
Screwfix Direct Limited Lichfield WS13 8LH Freehold Investment
Hachette UK Limited Didcot OX11 7HH Freehold Investment
Unilever Doncaster DN4 5PD Freehold Investment
Morrisons/Ocado Birch Coppice B78 1SE Long Leasehold Investment
Royal Mail Group Atherstone CV9 1LP Freehold Investment
Royal Mail Group DIRFT, Daventry NN6 7DD Freehold Investment
Dunelm (Soft Furnishings) Ltd Stoke-on-Trent ST4 4EY Freehold Investment
Marks & Spencer PLC Stoke-on-Trent ST4 4EY Freehold Investment
Carlisle, Esken Limited (Guernsey) Carlisle CA6 4NW Long Leasehold Investment
ITS and Wincanton Harlow CM20 2GF Freehold Investment
Unilever Cannock WS11 8JH Freehold Investment
Unit 330 Howdens Joinery Group PLC Raunds NN9 6NY Freehold Investment
Unit 660 Howdens Joinery Group PLC Raunds NN9 6NY Freehold Investment
Expert Logistics plc Crewe CW1 6BW Freehold Investment
Amazon Darlington DL1 4BF Freehold Investment
Amazon Haydock WA11 9FS Freehold Investment
BHS Home Appliances Corby NN18 8ET Freehold Investment
Amazon Durham DH6 5FG Freehold Investment
Ocado Bicester OX26 6GF Freehold Investment
Co-Op Biggleswade SG18 8YY Freehold Investment
Dogmates Ltd t/a Butternet Box Doncaster S81 8HH Freehold Investment
Global Infusion Group Ltd Aston Clinton HP22 5WJ Freehold Investment
Apple Studios UK Ltd, Unit 1 Aston Clinton HP22 5WJ Freehold Investment
Apple Studios UK Ltd, Unit 2 Aston Clinton HP22 5WJ Freehold Investment
Amazon Littlebrook DA1 5PZ Freehold Investment
Tesco Distribution Limited Nursling Southampton SO16 0WB Long Leasehold Investment
DPD Group UK Limited Bicester OX26 6GF Freehold Investment
Encirc Bristol BS11 9FG Freehold Investment
Ikea Distribution Services Limited Littlebrook DA1 5XT Freehold Investment
Pangea Laboratories Limited Aston Clinton HP22 5WJ Freehold Investment
Rexel UK Limited Aston Clinton HP22 5WJ Freehold Investment
LWC Drinks Limited Aston Clinton HP22 5WJ Freehold Investment
Syncreon Technologies UK Limited Bicester OX26 6GF Freehold Investment
Jet 2 Middlewich CW10 0TE Freehold Investment
Packaging One Middlewich CW10 0QJ Freehold Investment
BFS Group Limited Biggleswade SG18 9TE Freehold Investment
Bowman Ingredients Limited Biggleswade SG18 8QB Freehold Investment
Noatum Logistics Limited Biggleswade SG18 8UZ Freehold Investment
B&Q Ltd Blythe S81 8FH Freehold Investment
Iron Mountain Kettering NN14 1FQ Freehold Investment
Vacant Littlebrook DA1 5PT Freehold Investment
Harper Collins Glasgow G64 2QT Freehold Investment
Iron Mountain, Unit 1 Rugby CV23 9JR Freehold Investment
Iron Mountain, Unit 2 Rugby CV23 9JR Freehold Investment
Iron Mountain, Unit 3 Rugby CV23 9JR Freehold Investment
Dogmates Ltd t/a Butternut Box Doncaster (Blythe) S81 8HH Freehold Investment
Bilton Way Industrial Estate Enfield EN3 7ER Freehold Investment
Yodel Delivery Network, Unit 1 Merseyside L35 1QR Freehold Under Construction
Iron Mountain, Unit 4 Rugby CV23 9JR Freehold Under Construction
Vacant, Unit 1 Kettering NN14 1FQ Freehold Under Construction
Vacant, Unit 5 Rugby CV23 9JR Freehold Under Construction
Vacant, Unit 6 Rugby CV23 9JR Freehold Under Construction
Vacant, Unit 7 Rugby CV23 9JR Freehold Under Construction
Vacant, Unit 2 Merseyside L35 1QR Freehold Under Construction
DHL Supply Chain Limited Skelmersdale WN8 8DY Freehold Investment (4%)
Matalan Retail Limited Knowsley L33 7UF Freehold Investment (4%)
Cerealto UK Ltd Worksop S81 7BQ Freehold Investment (4%)
Appendix B: Market Value of the Properties as at 31 December 2023 split by
property type (100%)
Market Value
Distribution £4,596,985,000
Multi-Let Industrial £114,200,000
In the Course of Development £128,440,000
Portfolio Total £4,839,625,000
Appendix C: Market Value of the Properties as at 31 December 2023 split by
property location (100%)
Market Value
London & South East £1,815,920,000
Midlands £1,367,525,000
North East including Yorkshire £974,255,000
North West £492,545,000
South West £128,260,000
Scotland £61,120,000
Portfolio Total £4,839,625,000
Part C - Colliers Valuation Report in respect of BBOX
1. Report And Desktop Valuation
Project Bloom - Portfolio of 10 Properties
Date Of Valuation: Date Of Report:
31 December 2023 21 March 2024
Prepared For Prepared By
Tritax Big Box REIT plc Colliers International
Property Consultants Limited
Prepared For
Tritax Big Box REIT plc
Prepared By
Colliers International
Property Consultants Limited
Table Of Contents
VALUATION
Introduction (#_Toc159510484) (#_Toc159510484)
Purpose Of Valuation (#_Toc159510485) (#_Toc159510485)
Valuation Standards (#_Toc159510486) (#_Toc159510486)
Basis Of Value (#_Toc159510487) (#_Toc159510487)
Date of Valuation (#_Toc159510488) (#_Toc159510488)
Status Of Valuer & Conflicts Of Interest (#_Toc159510489) (#_Toc159510489)
The Properties (#_Toc159510490) (#_Toc159510490)
Assumptions, Extent Of Investigations And Sources Of Information
(#_Toc159510491) (#_Toc159510491)
Property Inspections & Measurements (#_Toc159510492) (#_Toc159510492)
Tenure (#_Toc159510493) (#_Toc159510493)
Valuation Approach (#_Toc159510494) (#_Toc159510494)
Valuation Summary (#_Toc159510495) (#_Toc159510495)
Reliance, Confidentiality & Disclosure (#_Toc159510496) (#_Toc159510496)
Our Ref: Project 95 Wigmore Street DDI +44 20 7344 6590
Bloom 2024 London MAIN +44 20 7935 4499
W1U 1FF EMAIL harry.flood@colliers.com
www.colliers.com/uk
Colliers International is the licensed trading name of Colliers International
Property Consultants Limited which is a limited liability partnership
registered in England and Wales with registered number 7556509. Our registered
office is at 95 Wigmore Street, London, W1U 1FF
21 March 2024
Tritax Big Box REIT plc UK Commercial Property REIT Limited
72 Broadwick Street PO Box 255
London Trafalgar Court Les Banques
W1F 9QZ St Peter Port
Channel Islands
Jefferies International Limited GY1 3QL
100 Bishopsgate Guernsey
London
EC2N 4JL N.M. Rothschild & Sons Limited
New Court
JP Morgan Securities plc St Swithin's Lane
25 Bank Street London
29th Floor EC4N 8AL
London
E14 5JP Numis Securities Limited
(trading as Deutsche Numis)
Akur Limited 45 Gresham Street
66 St James's Street London
London EC2V 7BF
SW1A 1NE
(together the "Addressees")
FAO: Bjorn Hobart, Partner
Dear Sirs
THE CLIENT: TRITAX BIG
BOX REIT PLC (THE 'COMPANY')
THE PORTFOLIO: 10 PROPERTIES WITHIN
THE 'TRITAX SYMMETRY' PORTFOLIO (THE 'PORTFOLIO')
DATE OF VALUATION: 31 DECEMBER 2023
Introduction
Colliers International Property Consultants Limited (hereafter referred to as
either 'Colliers' or 'we') have been instructed by Tritax Big Box REIT plc
(hereafter referred to as either the 'Company' or 'you) to provide an
indication of value for 10 properties held within the 'Tritax Symmetry'
portfolio (the 'Properties') as at the valuation date.
Purpose Of Valuation
We understand that our Report and Valuation will be required for inclusion in
an announcement to be issued by Tritax Big Box REIT plc in connection with the
recommended offer by the Company for the entire issued and to be issued
ordinary share capital of UK Commercial Property REIT Limited ('UK Commercial
Property') (the 'Transaction') pursuant to Rule 2.7 of the City Code on
Takeovers and Mergers December 2023 (the 'Code').
This report (the 'Report') has been prepared under the requirements of Rule 29
of the Code and will be included in an offer document and any further
documents or announcements to be published by the Company in connection with
the proposed Transaction (the 'Purpose').
Valuation Standards
The Valuation has been prepared in accordance with and complies with the
current edition of the RICS Valuation - Global Standards (Incorporating the
IVSC International Valuation Standards)' prepared by the Royal Institution of
Chartered Surveyors and the UK national supplement current at the Valuation
Date (the "Red Book").
The Properties have been valued by suitably qualified Registered Valuers who
fall within the requirements as to competence and independence as set out in
PS 2 of the Red Book.
We confirm that the Valuations have been prepared in accordance with the
requirements of Rule 29 of the Code, the relevant provisions of the Listing
Rules and Prospectus Regulation Rules issued by the UK Financial Conduct
Authority, and paragraphs 128 to 130 (inclusive) of Part III.1 (Property
companies) of TN 619.1 as applicable.
We confirm that Colliers complies with the competency and objectivity
guidelines under PS 2 of the RICS 'Red Book', and that we have undertaken the
valuations acting as 'external valuers' qualified for the purposes of this
valuation.
In order to comply with these Valuation Standards our files may be subject to
monitoring by the RICS.
Basis Of Value
The values stated in this Report represent our objective opinion of the
definition of Market Value as defined in IVS 104 Paragraph 30.1:
'The estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm's length
transaction after proper marketing and where the parties had each acted
knowledgeably, prudently and without
compulsion.'
This is also set out in the General Assumptions and Definitions contained in
the Appendix attached to this report.
Date of Valuation
31 December 2023.
Status Of Valuer & Conflicts Of Interest
The properties have been valued by H R B Flood MSc MRICS and J P Sutton BSc
(Hons) MRICS who are both appropriately qualified and experienced to undertake
the Valuations.
The signatories are members of Royal Institution of Chartered Surveyors (the
"RICS") and our valuers registered in accordance with the RICS Valuer
Registration Scheme (VRS).
We confirm that both signatories have sufficient current knowledge of each
relevant market involved and have the necessary skills and understanding to
prepare the Report.
As fully disclosed to you previously, and as set out in our Terms of
Engagement, we confirm that we have valued the Portfolio for accounting
purposes in both June and December of each year since December 2018.
Furthermore, from time to time, Colliers provides agency or professional
services to the Company.
We do not consider that this previous involvement represents a conflict of
interest and you have confirmed to us that you also consider this to be the
case. You have confirmed that all parties subject to the proposed Transaction
have provided their informed consent to proceed with this instruction.
The total fees, including the fee for this assignment, earned by Colliers
International Property Consultants Limited (or other companies forming part of
the same group of companies within the UK) from the Company (or other
companies forming part of the same group of companies) is less than 5.0% of
the total UK revenues for the financial year ending 31 December 2023. It is
not anticipated this situation will vary in the financial year to 31 December
2024.
We have confirmed we act as External Valuer as defined by the Red Book. We
further confirm that we comply with the requirements of independence and
objectivity under PS2 of the Red Book and have no conflict of interest in
respect of the Company or Properties to the best of our knowledge.
The Properties
The Portfolio comprises 10 freehold Properties across England all of which are
development sites upon which logistics warehouses are envisaged to be
developed in the future. There is currently no ongoing
development/construction work at any of the sites within the Portfolio with
each comprising 'development land'.
Assumptions, Extent Of Investigations And Sources Of Information
We have assumed that the information supplied to us by the Company and its
professional advisors, in respect of all material pertaining to the
properties, is both complete, accurate and up to date. It follows that we have
made an assumption that details of all matters likely to affect value has been
provided to us. We have not independently verified the information provided.
We have relied upon this information in preparing this Report and Valuation
and do not accept responsibility or liability for any errors or omissions in
that information or documentation provided to us, nor for any consequences
arising. Colliers also accepts no responsibility for subsequent changes in the
information that we have not been made aware of.
We have not inspected the title deeds and apart from those disclosed to us, we
have assumed that all the Properties in the Portfolio are free from outgoings
and that there are no unusual, onerous or restrictive covenants in the titles
or leases which would affect the values.
Furthermore, we have assumed any information supplied can, if necessary, be
verified. Should any of the information provided be found to be inaccurate or
incomplete there could be a variation in value.
Our General Assumptions and Definitions are contained within the Appendix
attached to this report.
Property Inspections & Measurements
All of the Properties were inspected externally during November 2018. We have
not been instructed to reinspect the Properties as part of this instruction
and have therefore made the assumption that there have been no material
changes to the Properties or immediate surroundings since our last inspection.
Where there have been material changes to the Properties, we have had regard
to the information provided to us by the Company. We have then reflected this
in the valuations.
As instructed, we have not measured any land areas and have in accordance with
your instructions relied upon those land areas and measurements provided by
the Company. We have also relied upon floor areas, with regard to the proposed
buildings as provided by the Company.
We have assumed that the measurements and areas are correct and have been
assessed and calculated in accordance with professional statement 'RICS
Property Measurement, 2nd edition' (2018)' and with reference to the RICS
guidance note, Code of Measuring Practice, 6th edition (2015)
(https://www.rics.org/uk/upholding-professional-standards/sector-standards/real-estate/code-of-measuring-practice/)
.
Tenure
We understand that all the Properties are of freehold tenure.
Valuation Approach
We have approached the Valuation on the basis of assessing each of the
Properties individually, having regard to what we believe each of the
Properties would achieve should it be brought to the market in isolation at
the date of Valuation. The Valuation makes no allowance for the disposal of
the Portfolio in its entirety as a single transaction, or as a series of
smaller portfolio lots. Our valuation additionally makes no allowance for any
effect on values should all of the Properties be offered to market at the same
time.
The Portfolio principally comprises sites upon which logistics warehouses
either have planning consent to be constructed or are in the process of being
bought forward for a planning application for logistics warehouses. Some of
the sites also incorporate areas where consent has been granted or will be
sought in the future for development of residential or other commercial uses.
Where planning consent has not yet been granted, we have considered the
planning advice obtained by the Company and their specialist advisors in
arriving at our opinion of the likely chance of a successful planning consent
being achieved in the future.
With regard to some of the Properties where they are of a long-term nature or
planning consent has not yet been granted and/or the property allocated in the
Local Plan for development, we have endeavoured to reflect the future
potential of a material change in the planning status by adopting a suitably
prudent discount.
The Properties have been mainly valued on the residual/development appraisal
method. This is the generally accepted method of valuing development
Properties. However, it is widely acknowledged that a comparative approach is
the preferred method of valuation, where appropriate comparable evidence is
available. This is because the residual approach suffers from a number of
deviations, which derive from the large number of assumptions that are
necessary, many of which are subjective. Where appropriate this approach has
been considered as with the residual approach outlined above.
None of the Properties within the Portfolio produce any material amounts of
income.
Valuation Summary
We are of the opinion that the aggregate Market Value, as at 31 December 2023,
of the 10 freehold Properties within the Portfolio is:
£134,225,000
(One Hundred and Thirty-Four Million Two Hundred and Twenty-Five Thousand
Pounds).
The aforementioned valuation figure represents the aggregate of the individual
valuation of each Property and should not be regarded as the value of the
Portfolio in the context of the sale of the single lot. An Appendix to this
Valuation Report contains brief details on each of the Properties and the
individual values.
There are no negative values to report.
Reliance, Confidentiality & Disclosure
We are responsible for the Valuation Report and we accept responsibility for
the information contained in the Valuation Report and confirm to the best of
our knowledge (having taken all reasonable care to ensure that such is the
case), the information contained in the Valuation Report is in accordance with
the facts and contains no omissions likely to affect its import. The Valuation
Report complies with and has been prepared in accordance with, and on the
basis of, the Code.
This Report and Valuation is addressed to the Addressees for the Purpose and
is for the use of and may be relied upon by the Addressees and the
shareholders of the Company for the Purpose. Save for any responsibility
arising under the Code to any person as to and the extent there provided, to
the fullest extent permitted by law, we do not assume any responsibility and
will not accept any liability to any other person for any loss suffered by any
such other person as a result of, or arising out of, or in accordance with
this Report and Valuation.
We have given and have not withdrawn our consent to the inclusion of this
Valuation Report in the announcement and reference to our name in the
announcement in the form and context in which they appear and in any further
document to be published or made available by the Company in accordance with
the Code and to the publication and reproduction of the Valuation Report as
required by the Code.
Neither the whole nor any part of this valuation, nor any reference thereto,
may be included in any documents other than those listed above without our
previous written approval to the form and context in which it will appear. We
acknowledge that this Valuation Report will be made available for inspection
and published on the website by the Company in accordance with the Code.
For the avoidance of doubt this Report and Valuation is provided by Colliers
International Property Consultants Limited and no partner, or member or
employee assumes any personal responsibility for it nor shall owe a duty of
care in respect of it.
Yours faithfully,
H R B Flood MSc MRICS J P Sutton BSc MRICS
Director Director
RICS Registered Valuer RICS Registered Valuer
Colliers International Property Consultants Limited Colliers International Property Consultants Limited
APPENDIX 6
DEFINITIONS
"Admission" admission of the New BBOX Shares to the Official List with a premium listing
and to trading on the Main Market.
"Akur" Akur Limited.
"Announcement" this announcement made pursuant to Rule 2.7 of the Takeover Code.
"BBOX" Tritax Big Box REIT plc, incorporated in England with registered number
08215888.
"BBOX Directors" the directors of BBOX as at the date of this Announcement or, where the
context so requires, the directors of BBOX from time to time.
"BBOX Equalising Dividend" as defined in paragraph 13 of this Announcement.
"BBOX General Meeting" the general meeting of BBOX Shareholders to be convened to, amongst other
things, consider and, if thought fit, approve the BBOX Resolution, including
any adjournment or postponement thereof.
"BBOX Group" BBOX, its subsidiaries and its subsidiary undertakings from time to time.
"BBOX Manager" Tritax Management LLP.
"BBOX Permitted Dividends" the BBOX Q4 2023 Dividend, any BBOX Quarterly Permitted Dividend and any BBOX
Equalising Dividend.
"BBOX Q4 2023 Dividend" as defined in paragraph 13 of this Announcement.
"BBOX Quarterly Permitted Dividend" as defined in paragraph 13 of this Announcement.
"BBOX Resolutions" the shareholder resolution of BBOX to approve, effect and implement the
Combination, including to approve the Combination as a Class 1 transaction.
"BBOX Shareholders holders of BBOX Shares.
"BBOX Shares" the ordinary shares of 1 pence each in the capital of BBOX.
"BDO" BDO LLP.
"Blocking Law" means (i) any provision of Council Regulation (EC) No 2271/1996 of 22 November
1996 (or any law or regulation implementing such Regulation in any member
state of the European Union); or (ii) any provision of Council Regulation (EC)
No 2271/1996 of 22 November 1996, as it forms part of domestic law of the
United Kingdom by virtue of the European Union (Withdrawal) Act 2018.
"Board" the board of directors of BBOX or UKCM as the context requires as at the date
of this Announcement or, where the context so requires, from time to time.
"Business Day" a day (other than a Saturday, Sunday or public or bank holiday in the UK and
Guernsey) on which banks are generally open for normal business in the City of
London and Guernsey.
"CBRE" CBRE Limited (a private limited company incorporated in England and Wales with
registered number 03536032) whose registered office is at Henrietta House,
Henrietta Place, London, England, W1G 0NB.
"Closing Price" the closing middle market quotation of a share derived from the Daily Official
List.
"Colliers" Colliers International Property Consultants Limited.
"Combination" the proposed combination by acquisition of the entire issued and to be issued
ordinary share capital of UKCM by BBOX, to be effected by the Scheme as
described in this Announcement (or by a Takeover Offer under certain
circumstances described in this Announcement) and, where the context requires,
any subsequent revision, variation, extension or renewal thereof.
"Combined Circular and Prospectus" the combined circular and prospectus to be published by BBOX and to be sent to
BBOX Shareholders containing, amongst other things, information on the
Combination and the New BBOX Shares and containing the notice convening the
BBOX General Meeting.
"Combined Group" the enlarged group following completion of the Combination comprising the UKCM
Group and the BBOX Group.
"Companies Law of Guernsey" the Companies (Guernsey) Law, 2008 (as amended).
"Conditions" the conditions to the implementation of the Combination as set out in Appendix
1 to this Announcement and to be set out in the Scheme Document.
"Confidentiality Agreement" the non-disclosure agreement dated 23 November 2023 entered into between UKCM
and BBOX.
"Court" the Royal Court of Guernsey.
"Court Meeting" the meeting or meetings of the Scheme Shareholders (or any class or classes
thereof) convened by order of the Court pursuant to section 107 of the
Companies Law of Guernsey for the purpose of considering and, if thought fit,
approving the Scheme (with or without amendment approved or imposed by the
Court and agreed to by BBOX and UKCM) including any adjournment, postponement
or reconvention of any such meeting, notice of which shall be contained in the
Scheme Document.
"CREST" the relevant system (as defined in the Uncertificated Securities Regulations
2001 (SI 2001/3755) in respect of which Euroclear UK & International
Limited is the Operator (as defined in the CREST Regulations).
"CREST Regulations" the Uncertificated Securities (Guernsey) Regulations, 2009, including (i) any
enactment or subordinate legislation which amends or supersedes those
regulations and (ii) any applicable rules made under those regulations or any
such enactment or subordinate legislation for the time being in force.
"Daily Official List" the Daily Official List published by the London Stock Exchange.
"Dealing Disclosure" an announcement pursuant to Rule 8 of the Takeover Code containing details of
dealings in interests in relevant securities of a party to an offer.
"Disclosed" (A) in respect of UKCM, the information disclosed (i) in the Annual Report and
Accounts of the UKCM Group for the financial year ended 31 December 2022; (ii)
in the interim report and accounts of the UKCM Group for the six months ended
30 June 2023; (iii) in this Announcement; (iv) in any other announcement made
by, or on behalf of, UKCM via a Regulatory Information Service in the two
calendar years prior to and on the date of this Announcement; (v) fairly in
writing prior to the date of publication of this Announcement to BBOX or any
of its affiliates (or their respective officers, employees, agents or advisers
in their capacity as such) by or on behalf of UKCM (including via the virtual
data room, established by, or on behalf of, UKCM for the purposes of the
Combination prior to 6.00 p.m. on 20 March 2024 (being the last Business Day
prior to the release of this Announcement)); and/or (vi) fairly by, or on
behalf of, UKCM to BBOX (or its respective officers, employees, agents or
advisers in their capacity as such) in the management due diligence meetings
held in connection with the Combination; and
(B) in respect of BBOX, the information disclosed (i) in the Annual Report and
Accounts of the BBOX Group for the financial year ended 31 December 2023; (ii)
in this Announcement; (iii) in any other announcement made by, or on behalf
of, BBOX via a Regulatory Information Service in the two calendar years prior
to and on the date of this Announcement; (iv) fairly in writing prior to the
date of publication of this Announcement to UKCM or any of its affiliates (or
their respective officers, employees, agents or advisers in their capacity as
such) by or on behalf of BBOX (including via the virtual data room,
established by, or on behalf of, BBOX for the purposes of the Combination
prior to 6.00 p.m. on 20 March 2024 (being the last Business Day prior to the
release of this Announcement)); and/or (v) fairly by, or on behalf of, BBOX to
UKCM or any of its affiliates (or their respective officers, employees, agents
or advisers in their capacity as such) in the management due diligence
meetings held by in connection with the Combination.
"EBITDA" earnings before interest, taxes, depreciation and amortisation.
"Effective" either:
1. if the Combination is implemented by way of the Scheme, the Scheme
having become effective in accordance with its terms; or
2. if BBOX elects to implement the Combination by way of a Takeover Offer
(with Panel consent), such Takeover Offer having been declared or having
become unconditional in all respects in accordance with the requirements of
the Takeover Code.
"Effective Date" the date on which the Combination becomes Effective.
"Employees" has the meaning given to it in paragraph 10 to this Announcement.
"EPRA" European Public Real Estate Association.
"EPRA Guidance" the EPRA Best Practices Recommendations Guidelines October 2019.
"EPRA NTA" a measure of net asset value designed by EPRA to present the fair value of a
company on a long term basis, as defined in the EPRA Guidance.
"ERV" estimated rental value.
"ESG" environmental, social and governance.
"EU" European Union.
"EU IFRS" the EU-adopted International Financial Reporting Standards.
"Exchange Ratio" the exchange ratio of 0.444 New BBOX Shares in exchange for each UKCM Share.
"Excluded Shares" any UKCM Shares which are registered in the name of, or beneficially owned by,
BBOX or any other member of the Wider BBOX Group.
"FCA" the Financial Conduct Authority.
"Forms of Proxy" the forms of proxy in connection with each of the Court Meeting and the UKCM
General Meeting which will accompany the Scheme Document.
"FSMA" the Financial Services and Markets Act 2000 (as amended).
"GAV" gross asset value.
"GFSC" the Guernsey Financial Services Commission.
"Guernsey" the Island of Guernsey.
"Investec" Investec Wealth & Investment UK.
"Jefferies" Jefferies International Limited.
"J.P. Morgan Cazenove" J.P. Morgan Securities PLC, which conducts its UK investment banking business
as J.P. Morgan Cazenove.
"Listed Property Sector" the universe of UK REITs and property investment companies admitted to trading
on the London Stock Exchange, comprising 52 companies and including both
internally and externally managed companies.
"Listing Rules" the rules and regulations made by the FCA under FSMA and contained in the
publication of the same name (as amended from time to time).
"London Stock Exchange" London Stock Exchange plc.
"Long Stop Date" 21 September 2024 or such later date (if any) as may be agreed in writing by
BBOX and UKCM (with the Panel's consent and (if required) as the Court may
allow).
"Main Market" the main market for listed securities operated by the London Stock Exchange.
"NAV" net asset value.
"New BBOX Shares" the new BBOX Shares to be allotted and issued credited as fully paid to Scheme
Shareholders in accordance with the Scheme.
"Offer Document" should the Combination be implemented by means of a Takeover Offer, the
document to be sent to UKCM Shareholders which will contain, inter alia, the
full terms and conditions of the Takeover Offer.
"Offer Period" the period commencing on 9 February 2024 and ending on the earlier of the date
on which the Scheme becomes Effective or the date on which the Scheme lapses
or is withdrawn (or such other date as the Takeover Code may provide or the
Panel may decide).
"Official List" the official list maintained by the FCA.
"Opening Position Disclosure" an announcement containing details of interests or short positions in, or
rights to subscribe for, any relevant securities of a party to an offer, as
defined in Rule 8 of the Takeover Code.
"Overseas Shareholders" Scheme Shareholders who have a registered address in a jurisdiction outside
the UK or Guernsey, or whom BBOX reasonably believes to be citizens, residents
or nationals of a jurisdiction outside the UK or Guernsey.
"Panel" the UK Panel on Takeovers and Mergers.
"Phoenix" Phoenix Life Limited.
"Picton" Picton Property Income Limited.
"PRA" the Prudential Regulation Authority.
"Quantified Financial Benefits Statement" as defined in Appendix 4 to this Announcement.
"Regulatory Information Service" any information service authorised from time to time by the FCA for the
purpose of disseminating regulatory announcements to the London Stock
Exchange.
"Restricted Jurisdiction" any jurisdiction in which, into which, or from which, making the Combination
or information concerning the Combination available to UKCM Shareholders would
violate the laws or regulations of that jurisdiction or may result in a
significant risk of civil, regulatory or criminal exposure.
"Rothschild & Co" N.M. Rothschild & Sons Limited.
"Scheme" the proposed scheme of arrangement under Part VIII of the Companies Law of
Guernsey between UKCM and Scheme Shareholders to implement the Combination
with or subject to any modification, addition or condition approved or imposed
by the Court and agreed to by UKCM and BBOX.
"Scheme Court Hearing" the Court hearing at which UKCM will seek an order sanctioning the Scheme.
"Scheme Court Order" the order of the Court sanctioning the Scheme.
"Scheme Document" the document to be dispatched to UKCM Shareholders including, among other
things, the full terms and conditions of the Scheme, an explanatory statement
in compliance with Part VIII of the Companies Law of Guernsey and the notices
convening the Court Meeting and the UKCM General Meeting.
"Scheme Record Time" the time and date specified as such in the Scheme Document, expected to be
6.00 p.m. on the Business Day immediately preceding the Effective Date, or
such later time and/or date as UKCM and BBOX may agree.
"Scheme Shareholders" holders of Scheme Shares at any relevant date or time.
"Scheme Shares" all UKCM Shares:
1. in issue as at the date of the Scheme Document;
2. (if any) issued after the date of the Scheme Document but prior
to the Scheme Voting Record Time; and
3. (if any) issued at or after the Scheme Voting Record Time but
on or prior to the Scheme Record Time either on terms that the original or any
subsequent holder thereof is bound by the Scheme, or in respect of which such
holders are, or shall have agreed in writing to be, bound by the Scheme,
and, in each case, which remain in issue at the Scheme Record Time, and
excluding any Excluded Shares.
"Scheme Voting Record Time" the date and time specified in the Scheme Document by reference to which
entitlement to vote at the Court Meeting will be determined.
"SEC" the United States Securities and Exchange Commission.
"Significant Interest" in relation to an undertaking or partnership, a direct or indirect interest of
20 per cent. or more of the total voting rights conferred by the equity share
capital (as defined in section 548 of the Companies Act) of such undertaking
or the relevant partnership interest.
"subsidiary" has the meaning given in section 1159 of the Companies Act 2006.
"subsidiary undertakings" has the meaning given in section 1162 of the Companies Act 2006.
"Supplemental Confidentiality Agreement" the supplemental agreement to the Confidentiality Agreement dated 29 February
2024 entered into between UKCM and BBOX.
"Takeover Code" the City Code on Takeovers and Mergers.
"Takeover Offer" if the Combination is implemented by way of a takeover offer (which shall be
an offer for the purposes of Part XVIII of the Companies Law of Guernsey), the
offer to be made by or on behalf of BBOX, or an associated undertaking
thereof, to acquire the entire issued and to be issued ordinary share capital
of UKCM including, where the context admits, any subsequent revision,
variation, extension or renewal of such offer;
"Third Party" has the meaning given to it in paragraph 3(d)(i) of Appendix 1 to this
Announcement.
"TUPE" the Transfer of Undertakings (Protection of Employment) Regulations 2006 (as
amended).
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland.
"UKCM" UK Commercial Property REIT Limited, incorporated in Guernsey with registered
number 45387.
"UKCM Directors" the directors of UKCM as at the date of this Announcement or, where the
context so requires, the directors of UKCM from time to time.
"UKCM Dissenting Director" or "Mr Pereira Gray" Peter Pereira Gray.
"UKCM Equalising Dividend" as defined in paragraph 13 of this Announcement.
"UKCM General Meeting" the general meeting of UKCM Shareholders to be convened to, amongst other
things, consider and if thought fit pass a special resolution in relation to
the Scheme and the Combination, including any adjournment or postponement
thereof.
"UKCM Group" UKCM, its subsidiaries and its subsidiary undertakings from time to time.
"UKCM IMA" the investment management agreement originally dated 29 December 2015 (as
amended from time to time and most recently on 28 March 2023) entered into by,
amongst others, UKCM and the UKCM Manager.
"UKCM Manager" abrdn Fund Managers Limited.
"UKCM Meetings" the Court Meeting and the UKCM General Meeting.
"UKCM Permitted Dividends" any UKCM Quarterly Permitted Dividend and any UKCM Equalising Dividend.
"UKCM Quarterly Permitted Dividend" as defined in paragraph 13 of this Announcement.
"UKCM Recommending Directors" the UKCM Directors other than the UKCM Dissenting Director.
"UKCM Shareholders" the holders of UKCM Shares.
"UKCM Shares" the ordinary shares of 25 pence each in the capital of UKCM.
"UK IFRS" the UK-adopted International Financial Reporting Standards.
"UK REIT" a UK Real Estate Investment Trust under Part 12 of the Corporation Tax Act
2010.
"US" or "United States" the United States of America, its territories and possessions, any state of
the United States of America and the District of Columbia.
"US Exchange Act" the United States Securities Exchange Act of 1934, as amended.
"US Securities Act" the United States Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"Wider BBOX Group" BBOX and its subsidiaries, subsidiary undertakings, associated undertakings
and any other body corporate partnership, joint venture or person in which
BBOX and all such undertakings (aggregating their interests) have a
Significant Interest (other than any member of the Wider UKCM Group).
"Wider UKCM Group" UKCM and its subsidiaries, subsidiary undertakings, associated undertakings
and any other body corporate partnership, joint venture or person in which
UKCM and all such undertakings (aggregating their interests) have a
Significant Interest (other than any member of the Wider BBOX Group).
All times referred to are London time unless otherwise stated.
All references to "GBP", "sterling", "£", "pence" or "p" are to the lawful
currency of the United Kingdom.
All references to statutory provision or law or to any order or regulation
shall be construed as a reference to that provision, law, order or regulation
as extended, modified, replaced or re-enacted from time to time and all
statutory instruments, regulations and orders from time to time made
thereunder or deriving validity therefrom.
References to the singular include the plural and vice versa.
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