REG - BWP REIT PLC - BWP REIT RAISES £35M AHEAD OF ADMISSION TO IPSX

WH IrelandAnnouncement

15/11/2022 16:45

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RNS Number : 5002G  BWP REIT PLC  15 November 2022

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THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS FOR THE PURPOSES OF
THE UK VERSION OF REGULATION (EU) 2017/1129, WHICH FORMS PART OF UK DOMESTIC
LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 OR AN ADMISSION
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FOR, OR OTHERWISE PURCHASE, ACQUIRE, SELL OR DISPOSE OF, ANY OF THE SECURITIES
REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF THE INFORMATION
CONTAINED IN THE ADMISSION DOCUMENT PUBLISHED BY THE COMPANY.

BWP REIT PLC

BWP REIT RAISES £35 MILLION AHEAD OF ADMISSION TO IPSX

and

PUBLICATION OF IPSX ADMISSION DOCUMENT

15 November 2022

 

BWP REIT PLC ("BWP REIT" or the "Company"), a newly formed single asset
company established to acquire Bridgewater Place ("Bridgewater Place" or the
"Property"), an office-led mixed use property situated in a prime location in
central Leeds, is pleased to announce that the Company has raised £35,000,000
from the issue of 35,000,000 new ordinary shares with a nominal value of 10
pence each (the "Ordinary Shares") at an issue price of 100 pence per share
(the "Issue Price"). Completion of the acquisition of the Property will take
place automatically on Admission pursuant to a completion undertaking.

 

Application has been made for the entire issued and to be issued ordinary
share capital of the Company to be admitted to trading on the Wholesale
segment of the International Property Securities Exchange ("IPSX")
("Admission"), with the new Ordinary Shares representing c. 99.9 per cent. of
the issued ordinary share capital on Admission. Admission is expected to occur
and dealings are expected to commence at 9.00 am on 16 November 2022.

 

In connection with the application for Admission, the Company has prepared an
admission document (the "Admission Document") which has been published and
will be available today at www.bwpreit.com (https://www.ixnetzero.com/)

 

The capital has been raised from a number of institutional and family office
investors. Upon Admission M7 Real Estate Ltd ("M7" and together with its
subsidiaries, the "M7 Group"), either directly or through its affiliates, will
own c.18.4% of the Company's share capital.

 

The Ordinary Shares will trade under the ticker 'BWP'. The ISIN number of the
Ordinary Shares is GB00BQ1NFW69 and the SEDOL code is BQ1NFW6.WH Ireland
Limited ("WH Ireland") acted as IPSX Lead Adviser and Settlement Agent.

 

On Admission, BWP REIT will become the third company to be admitted to trading
on IPSX. The platform is a FCA Regulated Investment Exchange and the world's
first such exchange dedicated to single asset real estate companies and those
owning multiple assets with commonality. IPSX Wholesale is reserved for
institutional and qualified professional investors, while the IPSX Prime
segment of the market is open to all investors and aims to give retail
investors the ability to acquire tradable shares in institutional quality real
estate assets.

 

About Bridgewater Place

 

Bridgewater Place is a large office, retail, and residential mixed-use
property completed in April 2007 that sits on a three-acre freehold site in a
prime location in central Leeds. At 30 above ground storeys, it was the
tallest property in Yorkshire until 2021. The internal demise of the
residential accommodation was sold under a 250-year lease in 2007 and
therefore is not owned by the Company. The Property has been independently
valued as at 30 August 2022 at £63 million by Avison Young.

 

The Property generates an annual contracted rental income of £5.97 million,
with a weighted average unexpired lease term ("WAULT") of 3.74 years to break
and 3.93 years to expiry. Approximately 8% of the total floor area is
currently vacant (as at 30 August 2022). Assuming 100% occupancy and
completion of the capital expenditure programme referred to below, the
Property would have an independently assessed market rental of £7.68 million
per annum. Approximately 77% of the total floor area is occupied by the
Property's three largest tenants, who are classified as either 'very low risk'
or 'low risk', with global multinational law firm Eversheds Sutherland
accounting for approximately 48% of the total floor area.

 

The Property comprises two separate but inter-connecting structures either
side of a central atrium, with 15,587 sq. ft. of retail units on the ground
and first floors and 234,711 sq. ft. of commercial office space from floors
one to nine. A 20-storey residential tower of 198 apartments sits above the
offices on the west wing spanning floors 11 to 30, with floor 10 used to house
the mechanical plant. There are two levels of parking offering 268 spaces in
the basement and at ground level.

 

Certain elements of the Property require substantial investment and this is
reflected in the approximately £63 million acquisition price. The funds
raised, along with the debt facility being novated on Acquisition, will be
used to fund the acquisition of the Property. £23 million of Loan Notes have
also been issued which will enable the Company to undertake a comprehensive
asset management plan for the Property. Until such works are completed, the
Company does not intend to pay a dividend and will focus resources on
achieving capital growth.

 

The Property benefits from excellent transport links by occupying a
high-profile position fronting Victoria Road (the main arterial link between
Leeds city centre and the M621 motorway) and close to Leeds Railway Station.

 

Use of Funds and Asset management strategy

 

The £35 million raised and the Loan Notes will be used to carry out a
wholesale repositioning of the Property. While the Company is not responsible
for the residential accommodation this also includes a comprehensive
remediation of the entire Property's cladding, which also benefits the
residential occupiers and creates an up to date, energy efficient building.
The costs of the remediation of the cladding at £14.5 million includes a £3
million allowance for inflation and the improvements to the Property are
estimated at £9 million. Costs of acquisition of the building,
issue expenses and working capital represent the balance of the funds
raised.

The asset management strategy for the Property aims to create a clear path to
capital growth through sustainability improvements (including a pathway to net
zero), increasing space utilisation, capturing rent reversion and-letting
vacant space. A comprehensive upgrade programme will be carried out in phases
over the next two to three years allowing current occupiers to remain in situ.
The programme aims to significantly improve how the Property is positioned
within the Leeds office market to both occupiers and ultimately future buyers
or long-term investors.

 

A key element of the asset management strategy will be to lease c.18,000 sq.
ft. of currently vacant space on floor 9 (following completion of certain
works by mid-2023), resulting in an expected c.£0.6 million per annum
increase in rental income and reducing service charge leakage.

 

M7 believes that with careful branding, marketing and proactive management,
the physical qualities of the Property, its energy performance credentials,
new amenities, inherent affordability relative to newly constructed buildings
together with regional connectivity, will all serve to position the Property
for the next generation of tenants.

 

Upon completion of the remedial works and repositioning of the Property, the
Board will seek to optimise shareholder returns either through an outright
sale of the Company or by listing the Company on the IPSX Prime market if the
Directors are advised that the increased liquidity will provide shareholders
with a choice to exit or retain their investment at an appropriate valuation.

 

M7 Real Estate Financial Services Ltd will serve as alternative investment
fund manager to the Company and M7 Real Estate Ltd will act as asset manager
in respect of the Property.

 

Edmund Craston, Chairman of BWP REIT, commented: "The demand received from
investors for BWP REIT signals their belief in the capital growth potential of
Bridgewater Place and their support for IPSX as a platform through which to
invest. Once Admission takes place the asset manager plans to commence a
series of works to fully reposition the asset and deliver an energy efficient
building, which will aim to capture rent reversion and re-let vacant space.
These asset management initiatives will seek to generate long term secure
income from a range of high calibre tenants, in one of the UK's largest
regional cities benefitting from strong underlying fundamentals."

Richard Croft, Executive Chairman of M7, added: "The planned admission of BWP
REIT plc to the IPSX Wholesale market, following a successful fundraise, is a
strong endorsement for both IPSX, as a nascent capital market for real estate
and the proposed asset management and remediation strategy that is to be
undertaken at Bridgewater Place.

 

"The acquisition of this capital compromised, but fundamentally core, asset
will allow investors to take part in a major repositioning that will create
one of Leeds's premier office destinations in what is, and will remain, a
supply constrained market due to the current cost of construction.
Furthermore, the equity raise has made allowance for BWP REIT Plc to tackle
one of the core issues facing many freeholders and their leaseholders, namely
cladding remediation. BWP REIT Plc will be undertaking a full remediation of
the cladding without recourse to the leaseholders within the residential
element of the building. This we believe will make a material social impact.

 

"The admission of BWP REIT on IPSX Wholesale creates liquidity and
transparency for investors, where previously participation in such a
transaction would not allow it."

 

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

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

 WH Ireland Limited (IPSX Lead Adviser and Settlement Agent)                              T: (http://www.m7mlreit.co.uk) 020 7220 1666
 Advisory - Chris Hardie, Darshan Patel, Sarah Mather,
                                         Andrew
 de Andrade

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

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

 

Important notice

 

The content of this announcement, which has been prepared by and is the sole
responsibility of the Company, has been approved by M7 Real Estate Financial
Services Ltd (which is authorised and regulated by the Financial Conduct
Authority) solely for the purposes of section 21(2)(b) of the Financial
Services and Markets Act 2000, as amended.

 

This announcement is being issued in the United Kingdom to and/or is directed
only at persons who are professional clients or eligible counterparties for
the purposes of the FCA's Conduct of Business Sourcebook. The opportunity to
invest in the Company is only available to such persons in the United Kingdom
and this announcement must not be relied or acted upon by any other persons in
the United Kingdom.

 

This announcement does not constitute an offer or recommendation concerning
the Ordinary Shares. Any prospective investor must carry out their own due
diligence and should form their own assessment, and is recommended to consult
an independent professional adviser as to the suitability of the Ordinary
Shares and evaluate all matters addressed herein.

 

The information contained in this announcement is for background purposes only
and does not purport to be full or complete. No reliance may be placed for any
purpose on the information contained in this announcement or its accuracy,
fairness or completeness.

 

The distribution of this annoucement and/or any offer, sale or purchase of, or
application to subscribe for, the Ordinary Shares may in certain jurisdictions
be restricted by law. Prospective investors and persons into whose posession
any document or other information referred to herein are required to inform
themselves about, and observe, any such restrictions. It is the responsibility
of each prospective investor to satisfy itself as to full compliance with the
applicable laws and regulations of any relevant jurisdiction, including
obtaining any requisite governmental, regulatory or other consent and
observing any other formality presented in such jurisdiction. Neither this
announcement nor the information contained herein is for publication,
distribution or release, in whole or in part, directly or indirectly, in or
into, the United States (including its territories and possessions, any State
of the United States and the District of Columbia), Australia, Canada, Japan,
South Africa or any other jurisdiction where to do so would constitute a
violation of the relevant laws of such jurisdiction.

 

This announcement does not constitute or form a part of any offer or
solicitation to purchase or subscribe for securities in the United States,
Australia, Canada, Japan, South Africa or any other jurisdiction where such
offer or sale would be unlawful. The Ordinary Shares mentioned herein have not
been, and will not be, registered under the United States Securities Act of
1933, as amended (the "Securities Act"), or with any securities regulatory
authority of any state or other jurisdiction in the United States. The
Ordinary Shares may not be offered or sold in the United States except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. No public offering of
securities is being or will be made in the United States.

 

This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "projects", "anticipates", "expects",
"intends", "may", "will" or "should" or, in each case, their negative or other
variations or comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These statements reflect
beliefs of the Directors (including based on their expectations arising from
pursuit of the Company's strategy) as well as assumptions made by the
Directors and information currently available to the Group. Although the
Directors consider that these beliefs and assumptions are reasonable, by their
nature, forward-looking statements involve known and unknown risks,
uncertainties, assumptions and other factors that may cause the Group's actual
financial condition, results of operations, cash flows, liquidity or prospects
to be materially different from any future such metric expressed or implied by
such statements. Past performance cannot be relied upon as a guide to future
performance and should not be taken as a representation that trends or
activities underlying past performance will continue in the future.
Forward-looking statements speak only as of the date they are made. No
representation is made or will be made that any forward-looking statements
will come to pass or prove to be correct.

 

WH Ireland, which is authorised and regulated in the United Kingdom by the
FCA, is acting exclusively as Lead Adviser for the Company and no-one else in
connection with the Issue and Admission and will not regard any other persons
as its client in relation to the Issue and Admission and will not be
responsible to anyone other than the Company for providing the protections
afforded to clients of WH Ireland, nor for providing advice in connection with
the Issue and Admission or any other matter or arrangement referred to in this
announcement.

 

No key information document has been prepared in respect of this annnouncement
or the Ordinary Shares in accordance with Regulation (EU) No 1286/2014 on key
information documents for packaged retail and insurance-based investment
products (PRIIPs) (and in the case of the United Kingdom, such regulation as
it forms part of UK domestic law by virtue of the European Union (Withdrawal)
Act 2018). Accordingly, the Ordinary Shares are not available to, and no
person may advise on, offer or sell Oridnary Shares for or to, any retail
client (as defined in MiFID II) in the European Economic Area or the United
Kingdom.

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