K&C REIT plc
Proposed Placing to Raise £150,000,000
Change of Name
Notice of General Meeting
K&C REIT plc (AIM: KCR), the residential real estate investment trust, today announces its intention to raise £150 million by way of an issue of new ordinary shares at 100 pence per share. In addition, the Company is pleased to announce that Duncan Walker, previously Investment Director at Helical Plc, will be appointed as an additional non-executive director of the Company upon Admission. In due course, the Company intends to apply for the admission of its ordinary shares to the premium segment of the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange.
In conjunction with the Placing, the Company is undertaking a consolidation of its existing share capital on the basis of every 10 Ordinary Shares into 1 New Ordinary Share. The new funds are intended to help support the business in executing larger acquisitions from its pipeline. In conjunction with the Placing, the Company has agreed in principle new debt facilities of up to £100 million to assist with the acquisition of residential property portfolios.
The Company also proposes a name change to KCR Residential REIT plc, conditional upon Shareholder approval, to reflect its diversified UK residential investment strategy.
· Raising £150 million by way of an issue of New Ordinary Shares
· Intention to apply for a Premium Listing in due course
· Identified acquisition property pipeline of over £400 million in the UK residential private rented sector
· Issue Price of 100 pence per New Ordinary Share and share consolidation of 10 to 1Appointment of Duncan Walker, former Investment Director and Board Director at Helical plc, as non-executive director of the Company on Admission
· Change of name to KCR Residential REIT plc.
The Placing is to be conducted by way of a bookbuilding process that will commence immediately following this Announcement in accordance with the terms and conditions set out in Appendix 4 to this Announcement.
Capitalised terms used in this Announcement shall have the meanings given to such terms in Appendix 2 ‘Definitions’ below.
K&C REIT plc was admitted to trading on AIM on 3 July 2015 and on 7 July 2015 acquired Coleherne, the only asset of which is a property in West London, for a consideration of £3.63 million. On 27 May 2016, the Company completed the acquisition of Osprey for a consideration of £1.6 million.
The property contained within Coleherne has been independently valued at £4.2 million, an increase of 16 per cent. on the purchase price and the properties within Osprey, including three additional apartments acquired for £935,000 in July 2017, valued at £4.4 million, an increase of 73 per cent. on the aggregate purchase price.
Having successfully demonstrated the concept of using a REIT structure to acquire residential property at a significant discount to market value, the Company is now seeking to accelerate its strategy and take advantage of opportunities available to acquire larger portfolios of residential property. To this end, the Company is seeking to raise £150 million (before expenses) through the Placing. In conjunction with the Placing, the Company has agreed in principle new debt facilities of up to £100 million for the acquisition of residential property portfolios.
The Net Proceeds, alongside its proposed debt facilities, will be used by the Group to fund the acquisition of portfolios of residential property in the private rented sector in line with the strategy detailed below, to repay all existing debt of £4.075 million plus accrued interest and to provide working capital.
The Board expects to complete its next acquisition, which it is anticipated will come from the existing pipeline of identified opportunities, within three months of Admission.
Dominic White, CEO of K&C REIT, commented:
“To fully capitalise on the investment opportunities that we are seeing across the UK market, the Company is seeking to raise the funds required to scale up. With stable and growing rental incomes generating strong yields, the UK private rented residential market is a highly attractive sector. Continuing our UK residential strategy and using the REIT structure, we have the ability to add value through active asset management to generate growth in capital values and rental yields.”
Arden Partners, the Company’s nominated adviser and broker, is acting as the Company’s sole bookrunner for the Placing.
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