TIDMKCR
RNS Number : 4243U
K&C REIT PLC
24 October 2017
THIS ANNOUNCEMENT, INCLUDING THE APPICES AND THE INFORMATION
CONTAINED HEREIN, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
STATES OF AMERICA, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA,
JAPAN OR NEW ZEALAND OR INTO ANY OTHER JURISDICTION WHERE TO DO SO
WOULD BREACH ANY APPLICABLE LAW OR REGULATION.
THIS ANNOUNCEMENT, INCLUDING THE APPICES, IS FOR INFORMATION
PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR
SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT
AND THE APPICES DO NOT CONSTITUTE OR CONTAIN ANY INVITATION,
SOLICITATION, RECOMMATION, OFFER OR ADVICE TO ANY PERSON TO
SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF
K&C REIT PLC OR INTO ANY OTHER JURISDICTION WHERE TO DO SO
WOULD BREACH ANY APPLICABLE LAW OR REGULATION.
THIS ANNOUNCEMENT CONTAINS INFORMATION WHICH, PRIOR TO ITS
DISCLOSURE, WAS INSIDE INFORMATION FOR THE PURPOSE OF THE MARKET
ABUSE REGULATION
K&C REIT plc
Proposed Placing to Raise GBP150,000,000
Change of Name
Share Consolidation
Notice of General Meeting
K&C REIT plc (AIM: KCR), the residential real estate
investment trust, today announces its intention to raise GBP150
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
GBP100 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.
Highlights:
-- Raising GBP150 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 GBP400
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 GBP3.63 million. On
27 May 2016, the Company completed the acquisition of Osprey for a
consideration of GBP1.6 million.
The property contained within Coleherne has been independently
valued at GBP4.2 million, an increase of 16 per cent. on the
purchase price and the properties within Osprey, including three
additional apartments acquired for GBP935,000 in July 2017, valued
at GBP4.4 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 GBP150 million (before expenses) through the
Placing. In conjunction with the Placing, the Company has agreed in
principle new debt facilities of up to GBP100 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 GBP4.075
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.
For further information, please contact:
K&C REIT plc info@kandc-reit.co.uk
Dominic White, Chief executive +44 20 3793
5236
Arden Partners plc
William Vandyk
Steve Douglas +44 20 7614
Tim Dainton 5917
+44 7747 788
Yellow Jersey PR 221
Charles Goodwin +44 7555 159
Abena Affum 808
Expected timetable: 2017
Announcement of the Placing; Bookbuild commences 7.00 a.m. on 24
October
Latest time and date for receipt of completed Forms of Proxy
10.00 a.m. on 22 November
and receipt of electronic proxy appointments
via the CREST system for the General Meeting
General Meeting
10.00 a.m. on 24 November
Admission and commencement of dealings 8.00 a.m. on 27
November
in the New Ordinary Shares on AIM
Each of the times and dates above refer to London time and are
subject to change by the Company. Any such change will be notified
to Shareholders by an announcement on a Regulatory Information
Service. The circular will contain further details of the expected
timetable for the Placing, General Meeting and Admission.
THE OPPORTUNITY
UK PRS now comprises 18 per cent. of the housing stock with a
market value of GBP1.3 trillion, having grown significantly over
the last 20 years. However, at present only two per cent. of this
market is professionally owned and managed with the majority of
growth having come from private "buy-to-let" investors.
Various initiatives have been made in recent years to encourage
professional investors to acquire PRS assets and the Directors and
Proposed Director believe that the UK is currently witnessing the
beginning of the institutionalisation of the sector.
The Company's management team has a track record of successfully
sourcing, financing, improving, letting and managing properties to
create sizeable rented property portfolios with attractive,
sustainable and growing cash-flows. The Group aims to take
advantage of growth in the private rented sector to build its
portfolio, enhancing yield and increasing net asset value through
active asset management. The Directors and Proposed Director
believe that this will allow the Company to provide Shareholders
with an attractive level of dividend income. Based on their
analysis of the REIT sector, The Directors and Proposed Director
believe there are currently no other REITs prioritising the
acquisition of property-holding SPVs in UK PRS.
The Company will target SPVs with unrealised capital gains where
REIT status can confer a commercial advantage to the Company. A
capital gain which accrues to a REIT in respect of a property that
is used for a Qualifying Property Rental Business, including gains
already accrued at the point of acquisition of that property, is
exempt from corporation tax. Therefore, a REIT can acquire a rental
property and on the subsequent disposal of that property, there
will not be a liability to corporation tax on any gain realised on
that disposal.
Acquisition of SPVs
The Directors and Proposed Director consider that the tax
exemption afforded to REITs will enable the Company to achieve a
yield on its portfolio that is higher than would be achievable by a
non-REIT company or an individual.
The Company has demonstrated that it is able to acquire property
assets below market value due in part to the benefits of its REIT
status. The resultant lower entry cost not only enhances the
initial yield, but also allows for an immediate gain on the NAV of
the properties acquired to be recorded when they are added to the
Company's balance sheet.
Pipeline
The Directors have identified a number of SPVs that they believe
are suitable acquisition targets and are in negotiations in respect
of over GBP400 million of property in aggregate. There is no
guarantee that these negotiations will lead to the Company
successfully completing any of these acquisitions. The Board will
use its extensive industry relationships and network of contacts to
identify further investment opportunities. The Board expects to
complete the Group's next acquisition within three months following
Admission.
Set out below is a summary of the potential acquisitions on
which negotiations are currently most advanced.
SPV A Indicative valuation GBP142 million, anticipated gross
yield 6.25 per cent., average size GBP177,000 SPV A has 17
residential buildings containing 802 units across the Midlands and
South East with a further pipeline to develop an additional 7
residential buildings across the Midlands which the Directors
believe could provide significant upside potential.
SPV B Indicative valuation GBP70 million, anticipated gross
yield 5.0 per cent., average size GBP333,000 SPV B property
portfolio consists of a mixture of 14 residential and commercial
assets containing 210 residential units located in the outer north
London. K&C expects to dispose of all commercial assets not
forming part residential units post the purchase of the
portfolio.
SPV C Indicative valuation GBP44 million, anticipated gross
yield 4.75 per cent., average size GBP346,000 SPV C property
portfolio consists of 127 residential units located in central and
east London close to transport hubs.
SPV D Indicative valuation GBP31 million, anticipated gross
yield 6.4 per cent., average size GBP163,000 SPV D consists of 190
residential units located in Manchester
SPV E Indicative valuation GBP116 million, anticipated gross
yield 5.8 per cent., average size GBP280,000 SPV E consists of 414
units in the South East.
REIT STRATEGY
The Company will build a portfolio of UK rented residential
property, diversified by location, building and tenant across the
UK in areas where both capital and rental growth are expected to be
strong in the coming years. The focus of acquisitions will be of
SPVs holding property assets, although the Company may also make
direct property acquisitions. When acquiring SPVs, the Company
expects that it will only acquire the entire share capital of those
SPVs. To gain access to a wider pool of opportunities over time,
the Company may invest in properties under development once they
are completed to the required specification. It may also invest in
the forward funding of developments but it will not take on
development, planning or construction risk.
The Company will not invest in Social Housing.
A small portion of the Company's portfolio may be invested in
commercial property where the commercial activity forms an integral
part of a residential property asset.
The Board reserves the right to review and potentially change
the investing strategy and activities from time to time. Any
material change would be subject to the approval of Shareholders in
a general meeting.
Acquisitions will be funded utilising the Company's cash
resources and access to debt. The level of any borrowing secured
against acquisitions will not exceed 50 per cent. loan to value and
the long-term average debt level is expected to be less than 40 per
cent. loan to value.
The Company has no constitutional borrowing limits. The REIT
Regime imposes an interest cover test whereby profits of the
tax-exempt business of a REIT Group must be at least 1.25 times the
costs of financing that business. If this condition is not met, the
Company will be required to pay corporation tax on an amount of
income equivalent to the excess financing costs or 20 per cent. of
the tax-exempt business profits if that is less.
The Company intends to join the Official List once it has
completed sufficient acquisitions to give it appropriate scale for
that market.
PROPERTY STRATEGY
The Company will target acquisitions of existing portfolios of
properties with individual unit values averaging below GBP500,000
on acquisition. The Directors and Proposed Director believe that
the greatest shortfall in the supply of housing stock is in the
lower to middle price bands, which is also the type of housing
experiencing the highest increase in demand. The Company will focus
its investment efforts on investment zones centred around the
cities contained in the Hometrack UK Cities House Price Index and
their commuter towns. This provides a spread of geographic coverage
and housing and economic characteristics. The current constituent
cities can be found at
www.hometrack.com/uk/insight/uk-cities-house-price-index/.
The Board has a depth of experience in property investment,
development and finance. The Directors and Proposed Director will
utilise their industry relationships and network of contacts to
identify and acquire investment opportunities. The Directors and
Proposed Director also expect to be able to increase capital and
rental values of the assets and to enhance returns by means of
judicious asset and property management, as further detailed
below.
The Directors and Proposed Director believe that the Company
will be able to offer an attractive total return to investors
because it will derive returns from the following:
-- stable and growing rental income; and
-- capital value growth as a result of:
o tax-efficient SPV acquisitions at below market value and tax-free realisations;
o value-adding asset and property management initiatives; and
o growth in capital value of residential properties.
In addition, the Company should benefit from economies of scale
compared to smaller landlords.
The Company's strategy is to acquire and hold property, but
where properties are disposed it is intended that the proceeds be
re-invested into new investment opportunities. However, from time
to time, the Company may decide to distribute an amount equal to
part of a realised gain to Shareholders by way of a special
dividend or other form of distribution.
The Company is targeting a total shareholder return of
approximately 10 per cent. per annum, comprising 4.5 per cent.
covered dividend yield and 5.5 per cent. capital growth. This is a
target only and does not constitute a dividend forecast. There can
be no assurance that the target can or will be met and is subject
to: (i) the Company's performance; (ii) available cash; (iii)
successful implementation of the Investing Policy; and (iv) the
Directors and Proposed Director being satisfied that the Company
will have sufficient distributable reserves in accordance with the
provisions of CA 2006 at the relevant time. For these reasons, this
target should not be treated as an indication of the Company's
expected or actual future results.
ASSET, PROPERTY AND DEVELOPMENT MANAGEMENT
Asset Management
The Company will continue to strategically and actively manage
its portfolio of assets post-acquisition. Residential assets held
for investment purposes are often under-managed due to the extent
of private ownership in the sector. This competitive weakness
provides the Company with the opportunity to add rental and capital
value. As part of the acquisition due diligence process an asset
management plan, will be prepared for each property.
The objective of each asset management plan will be to maximise
the property's long-term investment value, given its location and
the prevailing market circumstances. The asset management plan will
detail the capital spending required to optimise asset value. It
will also consider how to increase rental values, in particular
grow net rental income through the minimisation of property running
costs, delivery of high occupancy levels, day-to-day property
management arrangements and the expected period of ownership and
investment returns.
In some circumstances, the Company may choose to work with third
party asset managers where this approach can maximise portfolio
values.
Where appropriate, the Company will undertake improvements or
develop sites to increase value and yield which could include
gaining planning consent for change of use and implementing the
change, or, using external contractors, refurbishment or extension
of a property;
Property Management
The Group will decide whether to outsource time intensive day to
day property management activities to independent advisers, or
internalise it, on a case by case basis. Property management
includes negotiating tenancies, collecting rents and undertaking
day-to-day maintenance.
It is a key objective of the Group's strategy that it builds a
strong reputation for offering its tenants superior management,
building quality and overall service across its portfolio. The
Directors and Proposed Director believe that high-quality
management is a key differentiator for the Company that will
enhance marketability to tenants, thereby underpinning the rental
value of its units and the market value of the portfolio.
Development Management
The Company may engage with third party developers on a forward
funding or forward commitment basis, removing development and
planning risk, to access new build investment opportunities.
The Company does not intend to undertake "ground-up" direct
development activity.
THE UK PRIVATE RENTED SECTOR
The Directors and Proposed Director believe that UK institutions
have traditionally been wary of the UK PRS for historical and
operational reasons.
Throughout the post-war period and until the mid-1990s
successive governments have legislated to provide PRS tenants with
both security of tenure and controlled rents and then reversed this
legislation to make letting attractive again for landlords.
Due to this uncertainty and the drive towards home ownership the
proportion of the total housing stock in the PRS steadily declined
to just 9 per cent. in 1992 from 20 per cent. in 1971. In the
1990's the introduction of Assured Shorthold Tenancies (ASTs) and
other changes encouraged a small number of institutions to invest
in PRS. However, most institutions remained sceptical about
government interference, continuing to believe that investing in
PRS was too difficult for operational reasons.
UK PRS has grown significantly since the 1990's and now
comprises 18 per cent. of the housing stock with a value of GBP1.3
trillion, some 44 per cent. more than the entire commercial
property sector in the UK. In the five years to 2015, the
percentage of the UK population who were tenants rather than home
owners increased by 6.5 per cent. to 36.5 per cent. This
corresponds to an increase in private renters of 920,000 to 4.28
million in 2015 and a further increase to 4.53 million in 2016. The
majority of this growth has come however from private individuals
deciding to become 'buy-to-let' landlords. Landlords that own only
a single property hold 40 per cent. of the UK's PRS stock and only
8 per cent. describe themselves as fulltime landlords. It is
estimated only two per cent. of PRS is professionally managed.
To increase professionalism in PRS and encourage institutional
investors to invest in much needed housing stock, the Government
has introduced a number of measures. These include the introduction
of Real Estate Investment Trusts in 2007, and numerous tax changes
reducing the attractiveness of the sector to non-professional
'buy-to-let' landlords.
The Directors and Proposed Director believe that the UK is
currently witnessing the beginning of the institutionalisation of
PRS and that this investment sector is well positioned for growth
in the coming years.
Demand and supply drivers for UK residential property
The Directors and Proposed Director believe that the Company's
value-adding activities described elsewhere will be enhanced by
capital and rental value growth in the UK residential market.
In the view of the Directors and Proposed Director, the key
drivers for this growth are as follows.
Demand drivers
-- The populations of the UK and London are forecast to grow
substantially in the medium term. The UK is expected to surpass
Germany and France as the largest European country by population by
2070;
-- The ONS forecast for the population of the UK as a whole
published in October 2015 predicted a total population of around 66
million in 2016-2017, rising to around 70 million in 2026-2027 and
around 74 million in 2036-2037. Eurostat, the EU statistics agency,
forecast similar rates of increase in June 2017.
-- The UK is widely regarded as a secure, liquid, investible
property market with a strong legal system;
-- The UK, is considered to be relatively safe and an enjoyable
place in which to live and work;
-- London is one of the world's leading financial and cultural centres;
-- There is substantial demand from overseas buyers for
residential property in the UK, particularly in the prime areas of
London, which are generally considered to include the City of
Westminster, Kensington & Chelsea, the City of London and
Camden ("Prime Central London").
-- The proportion of new build properties in the Greater London
area as a whole bought by overseas buyers was 10.5 per cent. in
2014, 13.1 per cent. in 2015 and 17.9 per cent. in 2016.
International estate agents indicated that, between April 2014 and
April 2016, about 33 per cent. of sales were to international
buyers, rising to 50 per cent. in Central London.
-- The number of individuals in a household is decreasing due to
smaller family sizes and higher divorce rates, increasing the
overall need for housing.
Supply drivers
-- There is an existing under-supply of residential property;
-- UK new build completions were just over 150,000 units in
2015-2016. The UK government is still committed to deliver 1
million new homes in the period 2015-2020 and a further 500,000 by
the end of 2022. However, there is a growing consensus that the
target to meet existing need, make up the backlog and make a
meaningful improvement to affordability should be at least 300,000
homes per year.
-- Delivery of new property to the housing market is constrained
by lack of land and planning restrictions;
-- This shortage of supply is particularly prevalent in the more
affluent areas, particularly in London;
-- The UK PRS is rapidly maturing as an institutional asset
class with an increasing number of professional and institutionally
acceptable investment managers.
Taxation drivers
There have been several changes in the taxation of property over
that last 4 years, all of which, in the view of the Directors and
Proposed Director, are positive for the Company's business model as
they are reducing the attractiveness of PRS to 'Buy to Let'
non-professional landlords.
-- The Annual Tax on Enveloped Dwellings (ATED) was introduced
in 2013 and now applies to companies owning properties worth more
than GBP500,000 each. This was introduced to curb the avoidance of
paying SDLT by selling shares in a company rather than the property
itself. The Company is exempt from ATED as it is a professional
landlord.
-- SDLT for residential property was reformed in the
Chancellor's December 2014 statement, with new rates introduced as
from 4 December 2014. The key changes were the abolition of the
previous "slab" structure, whereby the rate of duty applied to the
whole purchase price rather than being applied progressively to the
tranches making up the total, and the introduction of higher rates
for the more expensive properties. The highest rate now is 12 per
cent. for the tranche in excess of GBP1.5 million compared with the
previous seven per cent. for the whole purchase price for
properties sold for in excess of GBP2 million. In addition to
abolishing the "slab" structure, rates were altered for the less
expensive properties and, in some cases, were reduced. This means
that for properties sold for GBP937,000 or less, the SDLT payable
is the same or lower than under the previous regime.
-- The government has also reformed the taxation of landlords,
particularly affecting private "buy-to-let" landlords. From 1 April
2016, there is an additional SDLT levy of 3 per cent. on buy-to-let
properties (and second homes) a From April 2017, tax relief for
finance costs will begin to be restricted to the basic rate of
income tax, with the reform being fully in place by April 2020.
This will have the effect of reducing after tax income from
property investments and HMRC estimate that tax receipts will
increase by GBP665 million pa by 2020-2021.
-- From April 2016, the "Wear and Tear Allowance", which allowed
landlords to deduct a fixed percentage of rental income from
taxable income to replace items such as furnishings and appliances
regardless of whether they had done so or not, was replaced with a
relief which only allows the actual cost of such expenditure to be
deducted. HMRC expects this will provide incentives to landlords to
improve tenancy conditions but also expects an increased
administrative burden for landlords as well as increased tax
receipts in the range GBP165 to GBP205 million pa from 2017
onwards.
-- From October 2017, the Prudential Regulation Authority, an
arm of the Bank of England, will require lenders to "portfolio
landlords", those with four or more properties, to implement "a
specialist underwriting process" in respect of affordability of any
new loans. These affordability assessments will include borrowers'
tax liabilities, personal income and possible future increases in
interest rates. Commentators consider that these measures could
reduce the availability of loans to private landlords and increase
the rates of interest they have to pay.
As a non-taxable professional landlord entity typically
purchasing existing company held property portfolios, the Company
is generally not affected by these changes, which may increase the
competitiveness of the Company as a purchaser of choice by current
owners.
The Directors and Proposed Director consider that key demand
drivers that relate more specifically to people moving away from
owning homes and into PRS are as follows.
-- Falling affordability of property to buy and higher
transaction costs (from changes in taxation);
-- Mortgage restrictions are increasing the required size of
buyers' deposits which are decreasingly affordable;
-- There is an increasing trend for people to rent their homes
as a lifestyle choice due to the flexibility it provides.
In addition, the Directors and Proposed Directors believe the
supply of property to the PRS relies on a number of factors.
-- 'Buy to Let' investors. Tax changes targeted at private
landlords referred to above reduce the attractiveness of this form
of investment, potentially leading to a reduction in supply from
this source to the PRS.
-- PRS institutional investors backing 'Build to Rent'
strategies. This is a new and relatively small part of the
supply.
-- Housebuilders building to rent. The traditional model for
housebuilders continues to be build-to-sell.
-- Owner occupiers unable to sell residential property and
becoming 'accidental landlords'. This increases when affordability
of housing to buy falls. It is a temporary factor.
The Directors and Proposed Director believe that there will be
an increasing gap between the demand for PRS property to rent, and
its supply, resulting in upward pressure on rents.
Despite recent uncertainties caused by the "Brexit" negotiations
and potential consequences for the UK and continental European
economies, The Directors and Proposed Director believe that the
multiple demand factors and supply limitations identified above
will lead to future growth in capital and rental values.
PROPOSED DIRECTOR
The Company is pleased to announce that Duncan Walker, 38, has
agreed to join the board as a non-executive director conditional
upon Admission. Duncan has significant experience within the
property market and most recently was Investment Director and board
director at Helical plc. While at Helical plc, Duncan completed
property transactions in excess of GBP1.5bn and oversaw the
tripling of the investment portfolio from its 2008 level. He was
also Managing Director of Renaissance Villages, a retirement living
development and operational business with a gross development value
of GBP350m, completing a buyout of a joint venture partner by
Helical plc and a restructure of the business. The Helical
portfolio that he managed ranked within the 3rd percentile over 3,
5 and 10 years as measured against IPD. Duncan has traded more than
GBP2.5bn of property over the last 15 years.
Prior to Helical plc, Duncan was European Investment Manager for
Edinburgh House Estates, a real estate investor with a wide range
of assets across the UK and Europe. He is a graduate of Oxford
University and holds a Post Graduate Diploma in Real Estate.
CHANGE OF NAME
In order to emphasise the Company's expanded focus on
residential property assets across the UK it is proposed that,
conditional upon Shareholder approval, the name of the Company be
changed to KCR Residential REIT plc
REGULATORY POSITION OF THE COMPANY
The Company is an AIF for the purposes of the AIFM Directive and
as such is required to have an investment manager that is duly
authorised by the FCA to undertake that role.
On 4 November 2014, the Company was granted registration by the
FCA as a "small registered UK AIFM" pursuant to regulation 10(2) of
the AIFM Regulations on the basis that it is a small
internally-managed AIF. Accordingly, the Company, whilst it holds
this registration, will not be subject in the UK to, inter alia,
the marketing restrictions placed on AIFs and AIFMs under the AIFM
Regulations.
One of the qualifying criteria for registration as a small
registered UK AIFM, for an AIF with leveraged assets (as is the
case with the Company), is that the assets under management must be
EUR100 million or less. Following completion of the Placing, on the
basis it is subscribed for in full, the assets under management of
the Company (including any assets acquired through the use of
leverage) will exceed EUR100 million.
The Company, as its own AIFM, therefore intends, following
Admission, to apply to the FCA for a full-scope Part 4A permission
under FSMA and the AIFM Regulations so that assets under management
of the Company (including any assets acquired through the use of
leverage) are permitted to exceed EUR100 million. However, as the
Company cannot anticipate the timing of its obtaining full-scope
authorisation following its application, it has engaged G10 Capital
Limited to ensure compliance with the requirements of the AIFMD
that apply to the Company.
G10 is a UK based investment manager platform that focuses on
providing services in particular to private equity and real estate
funds and is part of the Lawson Conner group of companies, which
provides compliance, risk advisory, software and regulatory
consulting services to the financial services industry.
G10 has been appointed, subject to Admission, as alternative
investment fund manager pursuant to the AIFM Agreement under which
it is responsible for overall portfolio management and compliance
with the Company's strategy providing alternative investment fund
manager services, ensuring compliance with the requirements of the
AIFMD that apply to the Company and undertaking all risk
management.
G10 has appointed K&C REIT pursuant to the Appointed
Representative Letter as its appointed representative in respect of
certain regulated activities under FSMA, including advising on
investments. K&C REIT will be appointed by G10 pursuant to the
Investment Advisory Agreement to advise it in respect of sourcing
investment opportunities which meet the Company's strategy. K&C
REIT will also be responsible for managing the underlying real
estate assets within the Company's investment portfolio, which
activity will not constitute a regulated activity under FSMA. G10
has, and shall maintain, the necessary expertise and resource to
supervise the delegated tasks effectively. Upon receiving
regulatory approval as an alternative investment fund manager,
K&C REIT will become the Investment Manager and the
relationship with G10 will cease.
The services of G10, its associates and their respective
officers and employees, are not exclusive to the Company. Although
G10 has given certain undertakings to the Company regarding other
mandates, and has in place a conflicts of interest policy, in
fulfilling its responsibilities to the Company, it may be subject
to certain conflicts of interest arising from its relations with
third parties to whom it also owes duties or in whom it has an
interest.
Under AIFMD, the AIFM is required to appoint an independent
depositary to which it must entrust the assets of the Company for
safekeeping. Kingfisher has been appointed, subject to Admission,
as the depositary pursuant to the Depositary Agreement.
For the avoidance of doubt, the implementation of the strategy
is not dependent upon leverage being taken on by the Group or
full-scope authorisation being obtained.
As a REIT, the New Ordinary Shares will be "excluded securities"
under the FCA's rules on non-mainstream pooled investments.
Accordingly, the promotion of the New Ordinary Shares will not be
subject to the FCA's restriction on the promotion of non-mainstream
pooled investments.
SHARE CONSOLIDATION
In connection with the proposed Placing, the Company intends to
undertake a consolidation of its existing share capital on the
basis of:
For every ten ordinary shares of 1 penny each one new ordinary
share of 10 pence
The consolidation is subject to the passing of the resolutions
to be proposed at the General Meeting
The milestones that currently apply to the restricted preference
shares in the capital of the Company which constitute the existing
management incentives will be adjusted by amending the Articles to
take account of the Consolidation.
DETAILS OF THE FUNDRAISING AND USE OF PROCEEDS
The Company is targeting a capital raising of GBP150 million by
way of an issue of 150,000,000 New Ordinary Shares at an Issue
Price of 100 pence per New Ordinary Share.
The Placing will be conducted by the Company in accordance with
the terms and conditions set out in Appendix 4 to this
Announcement.
The net proceeds of the Placing, estimated to be GBP145 million,
assuming the Placing is completed in full, will be used to finance
the acquisition of a portfolio of UK property assets, to repay the
Company's outstanding debt of approximately GBP4.075 million plus
accrued interest, and for working capital purposes.
Dominic White, Chief Executive, and Duncan Walker, proposed
Non-executive Director, are each subscribing for 50,000 New
Ordinary Shares pursuant to the Placing.
The New Ordinary Shares to be issued under the Placing will rank
pari passu in all respects with the Ordinary Shares and each
other.
The Company may, at the discretion of the Directors in
consultation with Arden, reduce the scale of the Placing subject to
a minimum issue of 100,000,000 New Ordinary Shares. In the event
that the Placing does not reach the minimum issue the Placing will
not proceed.
The Placing is conditional, inter alia, upon
-- the passing of the Resolutions at the General Meeting;
-- Admission occurring no later than 8.00 a.m. on 8 December
2017 (or such later time and/or date as the Company and Arden may
agree); and
-- the Placing Agreement not being terminated and becoming
unconditional in accordance with its terms.
If these conditions are not met, the Placing will not proceed
and an announcement to that effect will be made via a Regulatory
Information Service.
In the event that FCA approval for the Company to become an
appointed representative of G10 is not received prior to Admission,
the Company will, in its absolute discretion, scale back the
Placing to ensure its gross assets are below the EUR100m threshold
in order to remain a small registered UK AIFM.
ADMISSION
Application will be made, subject to passing of the Resolutions,
for the Enlarged Share Capital, comprising 155,275,182 New Ordinary
Shares, assuming the Placing is completed in full, to be admitted
to trading on AIM with effect from 27 November 2017.
GENERAL MEETING
In order to issue the Placing Shares, change the name of the
Company and consolidate the Ordinary Shares into New Ordinary
Shares the Company requires Shareholder consent in general
meeting.
A notice is being sent to Shareholders, convening the General
Meeting at 10.00am on 24 November 2017 at the offices of Fladgate
LLP, 16 Great Queen Street, London WC2B 5DG for the purposes of
considering and, if thought fit, approving the resolutions to:
-- consolidate every 10 Ordinary Shares into 1 New Ordinary Share;
-- approve the appointment of Duncan Walker as director of the Company;
-- authorise the directors to allot further New Ordinary Shares
pursuant to section 551 of CA 2006 in respect of:
a. the Placing;
b. up to 51,750,000 New Ordinary Shares (being approximately
one-third of the Enlarged Share Capital (assuming full subscription
under the Placing); and
c. up to 51,750,000 New Ordinary Shares (being approximately
one-third of the Enlarged Share Capital (assuming full subscription
under the Placing) if issued pursuant to a rights issue or other
pre-emptive issue of shares;
-- disapply the statutory pre-emption rights contained in
section 561 of CA 2006 in respect of:
a. a rights issue or other pre-emptive issue of shares
b. the Placing
c. up to 7,750,000 New Ordinary Shares (being approximately 5
per cent. of the Enlarged Share Capital, assuming full subscription
under the Placing);
-- amend the Articles; and
-- change the name of the Company to KCR Residential REIT plc
Appendix 1:
AIM Rules Disclosure Regarding Proposed Director
Duncan Walker, 38, is currently a director of the following
company:
Capannone Limited
In addition, Duncan has been, within the preceding five years, a
director of:
Abbeygate Helical Helical (Enterprise) Helical Bar (Great
(Winterhill) Limited Limited Dover Street)
Limited
Helical (Bow) Helical (Quartz) Helical Bar Developments
Limited Limited (South East) Limited
Helical Bar (EC3 Helical (Huddersfield) Helical (Cowley)
Developments) Limited Limited
Limited
Helical (Witham) Helical (Porchester) Helical (Kidlington)
Limited Limited Limited
Helical (Colchester) Helical (Artillery) Helical (Southampton)
Limited Limited Limited
Helical (Woking) Helical Bar (Maple) Helical (Doxford)
Limited Limited Limited
Helical (West Helical (Shepherds) Helical (Bramshott
Drayton) Limited Limited Place) Limited
Helical Bar (Fenchurch Baylight Developments Helical (Chester)
Street) Limited Limited Limited
14 Fieldgate Street Helical Finance Helical (Jarrow)
Limited (Bar) Limited Limited
Corby Town Centre G2 Estates Limited Helical (Halesowen)
Limited Limited
Corby Town Centre Helical Bar (Falkirk) Helical (Northampton)
Management Limited Limited Limited
Corby TC Limited Helical Bar (Cathcart) Helical (Durrants)
Limited Limited
Helical (Beacon Helical (Shoreditch) Helical (Exeter)
Road) Limited Limited Limited
Helical (Stone) Helical Bar (Yoker) Helical (Liphook)
Limited Limited Limited
Helical (Alfreton) Helical Bar Developments Helical (Sevenoaks)
Limited Limited Limited
Helical (Great Helical Finance Helical (Winterhill)
Yarmouth) Limited (RBS) Limited Ltd
Helical (Chart) Metropolis Property Helical Retirement
Limited Limited Homes Limited
Helical (Six) Helical (Broadway) Helical Investment
Limited Limited Holdings Limited
Helical (Scarborough) Helical Services Hb Sawston No.3
Limited Limited Limited
Helical (Mint) Helical (CG) Limited Helical (Salford)
Limited Limited
Helical (Gracelands) Helical (Telford) Abbeygate Helical
Limited Limited (Leisure Plaza)
Limited
Helical (Havant) Helical (Hedge Helical (Wellingborough)
Limited End) Limited Limited
Helical (Dale Helical (West Dencora (Docklands)
House) Limited London) Limited Limited
Helical (Sun) Helical (Corby Helical (Power
Limited Investments) Limited Road) Limited
Helical (Brownhills) Helical Plc Dencora (Fordham)
Limited Limited
Helical (Peterborough) Helical (East Helical (Glasgow)
Limited Kilbride) Limited Limited
Helical (Stevenage) Helical (Basildon) Helical (Booth
Limited Limited St) Limited
Helical (Cannock) Basildon Nominee Renaissance Villages
Limited Limited Limited
Helical (Ellesmere Newmarket General Bramshott Place
Port) Limited Partner Limited Management Limited
Helical (Hinckley) Helical (Sutton-In-Ashfield) Durrants Management
Limited Limited Limited
Helical (Portbury) Sutton-In-Ashfield Maudslay Park
Limited Nominee Limited Management Limited
Helical (Southend) Newmarket Nominee Millbrook Village
Limited Limited Management Limited
Helical Finance Sutton-In-Ashfield Helical Bar Limited
(Av) Limited General Partner
Limited
Helical (Cobham) Helical (Merlin Helical Bar (Jersey)
Limited Park) Limited Limited
Helical (Boss Helical (Motherwell) Helical (Cardiff)
2) Limited Limited Limited
Helical (Hub) Helical (FP) Holdings Aycliffe And Peterlee
Limited Limited Investment Company
Limited
Helical (LB) Limited Helical Bar (Mitre Helical (Newmarket)
Square) Developments Limited
Limited
Helical (Yate) Helical Properties The Morgan Apartments
Limited Retail Limited Management Company
Limited
Helical (Harrogate) Helical Food Retail Mill Street Management
Limited Limited (Slough) Limited
Helical (Boss) Helical (Southall) Helical (Bramshott
Limited Limited Place) Limited
Helical (Churchgate) Helical (Stockport)
Limited Limited
Helical (Whitechapel) Helical (Mill
Limited Street) Limited
There is no further information regarding Duncan Walker which
requires disclosure pursuant to Schedule 2(g) of the AIM Rules
Appendix 2:
Definitions
The following definitions apply throughout this announcement
unless the context requires otherwise:
Admission the admission of the Enlarged Share Capital to trading
on AIM
AIF alternative investment fund
AIFM Agreement the management agreement between the Company and
G10
AIFMD or AIFM Directive the Directive 2011/61/EU of the European
Parliament and of the Council of 8 June 2011 on Alternative
Investment Fund Managers and amending Directives 2003/41/EC and
2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No.
1095/2010; the Commission Delegated Regulation (EU) No 231/2013 of
19 December 2012 supplementing Directive 2011/61/EU of the European
Parliament and of the Council with regard to exemptions, general
operating conditions, depositaries, leverage, transparency and
supervision; the UK AIFM Regulations and any other applicable
national implementing measures, including FCA Rules
AIFM Regulations the Alternative Investment Fund Managers
Regulations 2013
AIM the AIM market, operated by the London Stock Exchange.
AIM Rules the AIM Rules for Companies (being the rules of the
London Stock Exchange which set out the obligations and
responsibilities of and in relation to companies whose shares are
admitted to AIM, as published and occasionally amended by the
London Stock Exchange).
Arden Arden Partners Plc, the Company's nominated adviser and
sole broker
Articles the articles of association of the Company adopted by
the Company by a special resolution passed at a general meeting of
the Company held on 20 February 2017.
Board or Directors the directors of the Company
CA 2006 the Companies Act 2006.
Coleherne K&C (Coleherne) Limited, incorporated in England
and Wales with company number 02818584, formerly Silcott Properties
Limited and being a wholly owned subsidiary of the Company.
Company or K&C REIT K&C REIT plc, incorporated in
England and Wales with registered number 09080097.
Consolidation the proposed consolidation of every 10 Ordinary
Shares into 1 New Ordinary Share.
CTA 2009 the UK Corporation Tax Act 2009
CTA 2010 the UK Corporation Tax Act 2010
Depositary Agreement the depositary agreement between the
Company, G10 and Kingfisher
Enlarged Share Capital the issued ordinary share capital of the
Company on Admission and immediately following completion of the
Placing, comprising the New Ordinary Shares arising from the
Consolidation and the Placing.
FCA the Financial Conduct Authority of the United Kingdom.
FSMA the Financial Services and Markets Act 2000, as
amended.
G10 G10 Capital Limited, a company incorporated in England and
Wales with registered number 09224491, the alternative investment
fund manager to the Company for the purposes of AIFMD
General Meeting the general meeting of the Company to be held at
10.00 a.m. on 24 November 2017, or any adjournment thereof.
Gross Proceeds the gross proceeds of the Placing.
Group the Company and its subsidiaries and subsidiary
undertakings from time to time.
HMRC HM Revenue & Customs.
IPD the Investment Property Databank
Kingfisher Kingfisher Property Partnerships Limited, a company
incorporated in England and Wales with registered number 04109242,
the depositary to the Company for the purposes of AIFMD.
London Stock Exchange London Stock Exchange plc.
Main Market the London Stock Exchange's main market for listed
securities
market value the estimated amount for which a property should
exchange on the date of valuation between a willing buyer and a
willing seller in an arm's length transaction after proper
marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion.
NAV or Net Asset Value the net asset value of the Company as
calculated in accordance with the Company's accounting
practices.
Net Proceeds the funds received by the Company under the Placing
less any expenses paid or payable in connection with Admission, the
Placing.
New Ordinary Shares ordinary shares of 10 pence each in the
capital of the Company (which will arise from the
Consolidation).
Notice the notice of the General Meeting
Official List the Official List maintained by the UKLA.
Ordinary Shares ordinary shares of 1 penny each in the capital
of the Company, of which 52,751,813 are in issue at the date of
this announcement.
Osprey K&C (Osprey) Limited, incorporated in England and
Wales with company number 01864755, formerly known as The Osprey
Management Company Limited and being a wholly owned subsidiary of
the Company.
Placing the proposed conditional placing of the Placing Shares
by or on behalf of the Company at the Placing Price.
Placing Agreement the placing agreement between the Company, the
Directors and the Proposed Director, and Arden
Placing Price 100p per New Ordinary Share.
Placing Shares 150,000,000 New Ordinary Shares which are
proposed to be issued pursuant to the Placing.
Premium Listing a Premium Listing on the Official List under
Chapter 6 of the Listing Rules.
Private Rented Sector or PRS a classification of United Kingdom
housing tenure as described by the Department for Communities and
Local Government.
Property Rental Business a business within the meaning of
section 205 of the CTA 2009 or an overseas property business within
the meaning of section 206 CTA 2009, but, in each case, excluding
certain specified types of business (as per section 519(3) of the
CTA 2010).
Proposed Director Duncan Walker, proposed non-executive
director
Qualifying Property Rental Business a Property Rental Business
fulfilling the conditions in section 529 of the CTA 2010.
Registrar Share Registrars Limited of The Courtyard, 17 West
Street, Farnham, Surrey GU9 7DR.
REIT Real Estate Investment Trust, being a company or group of
companies to which Part 12 of the CTA 2010 applies.
REIT Group a REIT, which is a REIT by virtue of a notice given
under section 523 of the CTA 2010.
REIT Regime the UK taxation regime created and provided for by
part 12 of the CTA 2010.
Resolutions the resolutions to be proposed at the General
Meeting, as set out in the Notice.
Shareholders holders of Ordinary Shares or New Ordinary
Shares.
Social Housing homes which are social rented, affordable rented
and intermediate housing provided to specified eligible households
whose needs are not met by the market.
SPVs special purpose vehicles.
subsidiary has the meaning given to it by section 1159 CA
2006.
APPIX 3
Taxation and the REIT Regime
The statements on taxation below are intended to be a general
summary of certain tax consequences that may arise in relation to
the Company and the other members of the Group. This is not a
comprehensive summary of all technical aspects of the taxation of
the Company and the other members of the Group and is not intended
to constitute legal or tax advice to investors.
Prospective investors should familiarise themselves with, and
where appropriate should consult their own professional advisers
on, the overall tax consequences of investing in the Company. The
statements relate to investors acquiring Ordinary Shares for
investment purposes only, and not for the purposes of any
trade.
As is the case with any investment, there can be no guarantee
that the tax position or proposed tax position prevailing at the
time an investment in the Company is made will endure indefinitely.
The tax consequences for each investor of investing in the Company
may depend upon the investor's own tax position and upon the
relevant laws of any jurisdiction to which the investor is
subject.
The Group is a REIT Group for the purposes of Part 12 of the
Corporation Tax Act 2010.
The special rules which apply to the taxation of a company which
enters the REIT Regime are summarised below.
A REIT does not suffer UK corporation tax on the profits (income
and capital gains) from its Qualifying Property Rental Business,
provided that certain conditions are satisfied. Instead,
distributions in respect of the Qualifying Property Rental Business
will be treated for UK tax purposes as UK property income in the
hands of shareholders. These are referred to as Property Income
Dividends ("PIDs").
However, UK corporation tax remains payable in the normal way in
respect of income and gains from a REIT's Residual Business.
Dividends relating to the Residual Business are treated for UK tax
purposes as normal dividends. Any normal dividend paid by the
Company is referred to in this Part VI as a "Non-PID Dividend".
The tax treatment of a dividend paid by the Company in the first
accounting period after it achieves REIT status would depend on
whether it is deemed to be paid out of profits that arose before or
after the REIT Group became a REIT. In addition, where on an
on-going basis after the REIT Group enters the REIT Regime the
Company makes distributions to Shareholders in excess of the amount
required to satisfy the "distribution condition" for each
accounting period (see further below), distributions to
Shareholders are likely to consist of a mixture of PID and Non-PID
Dividends as calculated in accordance with specific attribution
rules. The Company will provide Shareholders with a certificate
setting out how much, if any, of their dividends is a PID and how
much is a Non-PID dividend.
Qualification as a REIT
Subject to meeting a number of conditions, a company may become
a REIT by serving notice on HMRC that it is a REIT from a date
specified in that notice. Any property rental business the Company
or any other member of the REIT Group has been to that date
carrying on is deemed to cease at the point of entry to the REIT
Regime and accordingly, the property rental business carried on by
the Company and each relevant member of the REIT Group subsequently
is deemed to be a new business, established and commenced at the
date of entry into the REIT Regime. At the point of entry into the
REIT Regime the accounting period of the Company and each other
member of the REIT Group is deemed to end for tax purposes and
another accounting period will begin.
In order to qualify as a REIT, the Company must satisfy certain
conditions throughout each accounting period in which it is to be
treated as a REIT. A non-exhaustive summary of the material
conditions is set out below.
A. Company conditions
A company must be solely resident in the UK for tax purposes, it
must not be an open-ended investment company and its ordinary
shares must be admitted to trading on a recognised stock exchange,
such as the London Stock Exchange, and either listed on the
exchange or traded on it. A company must also not be a "close
company" for UK tax purposes, which generally means it must not be
controlled (through the holding of in excess of 50 per cent. of
share capital/voting rights etc) by five or fewer persons or,
broadly, must have more than 35 per cent. of shares listed and in
public hands. There is an exception however for this condition for
the first three years following entry into the REIT Regime. For the
purposes of this close company test the holdings of certain types
of institutional investors are not taken into account.
B. Share capital restrictions
There must only be one class of ordinary share in issue and the
only other shares a company may issue are non-voting restricted
preference shares.
C. Restrictions on types of borrowing
The company must not be party to any loan in respect of which
the lender is entitled to interest which exceeds a reasonable
commercial return on the consideration lent or where the interest
depends to any extent on the results of the company's business or
on the value of any of its assets.
On-going conditions for maintaining REIT status
In addition to satisfying the above conditions on entry into the
REIT Regime, the REIT Group would be required to satisfy the
conditions summarised below on an on-going basis during each
accounting period in order to maintain REIT status:
(i) The Qualifying Property Rental Business must throughout each
accounting period involve at least three properties and have no one
property representing more than 40 per cent. of the total value of
all the properties involved in the business.
(ii) The Company is required to distribute to shareholders
(subject to the availability of sufficient distributable reserves)
100 per cent. of the income profits arising in each accounting
period which are derived from distributions of profits or gains of
the Qualifying Property Rental Business of another UK REIT and at
least 90 per cent. of the income profits arising from the REIT
Group's Qualifying Property Rental Business derived from other
sources in each accounting period (broadly, calculated using normal
tax rules and disregarding non-UK source profits of a non-UK member
of the REIT or of a non-UK member of a UK REIT from which the REIT
receives such a distribution). Such distributions will be in the
form of a PID and must generally be made on or before the filing
date for the tax return for the accounting period.
(iii) The income profits arising to the Qualifying Property
Rental Business must represent at least 75 per cent. of the total
profits for the accounting period. Such profits are calculated in
accordance with International Accounting Standards, before
deduction of tax and excluding, broadly, gains and losses on the
disposal of property and revaluation of properties, and certain
exceptional items.
(iv) At the beginning of the accounting period the gross fair
value of the assets in the Qualifying Property Rental Business
(including cash held on deposit and shares in another UK REIT) must
represent at least 75 per cent. of the total fair value of assets
held. However, a breach should not occur in the first accounting
period upon entry into the REIT Regime, provided that the test is
met at the end of the first accounting period.
Effects of becoming a REIT
A. Tax exemption
A REIT does not suffer UK corporation tax on the profits (income
and capital gains) derived from its Qualifying Property Rental
Business. UK corporation tax will still apply in the normal way in
respect of any income and gains of any Residual Business.
B. The 10 per cent. rule
A REIT may become subject to an additional tax charge if it pays
a distribution to corporate shareholders that hold at least 10 per
cent. of share capital or voting rights and/or are entitled to at
least 10 per cent. of distributions. This tax charge will not be
incurred if the REIT has taken reasonable steps to avoid making
distributions to such a shareholder in line with HMRC guidance.
C. Distributions - obligations to withhold tax
Subject to certain exceptions, a REIT is required to withhold
income tax at source at the basic rate (currently 20 per cent.)
from PIDs. A REIT must also provide shareholders with a certificate
setting out the amount of tax withheld. Tax is not required to be
deducted when distributions are paid to certain types of
shareholder including UK corporate and UK tax-exempt bodies (such
as SIPPs and ISAs). Where distributions are made to shareholders
resident in a country with a double taxation treaty with the UK,
tax should be withheld and the shareholder may seek a refund of the
tax where the treaty withholding tax rate is lower.
D. Interest cover ratio
A tax charge will arise if, in respect of any accounting period,
the ratio of the income profits (before capital allowances) to the
financing costs incurred in respect of the Qualifying Property
Rental Business is less than 1.25. The amount (if any) by which the
financing costs exceeds the amount of those costs which would cause
that ratio to equal 1.25 is chargeable to corporation tax up to a
maximum of 20 per cent. of the income profits of the Qualifying
Property Rental Business.
Exit from the REIT Regime
After joining the REIT Regime, a REIT can give notice to HMRC
that it wishes to leave the REIT Regime at any time.
It is important to note that following satisfaction of the REIT
conditions by the Company and the REIT Group, the Company will not
be able to guarantee continued compliance with all the conditions
and the REIT Regime may cease to apply in certain circumstances.
Broadly, HMRC may require the Company and the other members of the
REIT Group to exit the REIT Regime if:
a) any breach of the conditions relating to the Qualifying
Property Rental Business, or an attempt to avoid tax, is considered
sufficiently serious;
b) a certain number of minor or inadvertent breaches, by the
Company or members of the REIT Group, of the conditions occur in a
specified period; or
c) HMRC has issued two or more notices, to the Company or
members of the REIT Group, in relation to the avoidance of tax
within a 10-year period of the first notice having been given.
Appendix 4
Terms and Conditions of the Placing
(IMPORTANT INFORMATION FOR PLACEES ONLY CONCERNING THE
PLACING)
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES,
AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY
OTHER JURISDICTION IN OR INTO WHICH SUCH RELEASE, PUBLICATION OR
DISTRIBUTION WOULD BE UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT AND
REFERRED TO HEREIN ARE DIRECTED ONLY AT PERSONS SELECTED BY ARDEN
PARTNERS PLC ("ARDEN") WHO ARE (A) PERSONS IN MEMBER STATES OF THE
EUROPEAN ECONOMIC AREA WHO ARE "QUALIFIED INVESTORS", AS DEFINED IN
ARTICLE 2.1(E) OF DIRECTIVE 2003/71/EC AS AMED FROM TIME TO TIME
AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY
MEMBER STATE (THE "PROSPECTUS DIRECTIVE") AND (B) IF IN THE UNITED
KINGDOM, PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS
RELATING TO INVESTMENTS WHO FALL WITHIN THE DEFINITION OF
"INVESTMENT PROFESSIONALS" IN ARTICLE 19(5) OF THE FINANCIAL
SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 AS
AMED (THE "FPO") OR FALL WITHIN THE DEFINITION OF "HIGH NET WORTH
COMPANIES, UNINCORPORATED ASSOCIATIONS ETC" IN ARTICLE 49(2)(A) TO
(D) OF THE FPO AND (II) ARE "QUALIFIED INVESTORS" AS DEFINED IN
SECTION 86 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA")
OR (C) PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED
(ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT
PERSONS"). THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT
HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT
RELEVANT PERSONS.
This Announcement does not constitute an offer to sell or issue
or a solicitation of an offer to buy or subscribe for Placing
Shares in any jurisdiction including, without limitation, the
United States, Canada, Australia, the Republic of South Africa or
Japan or any other jurisdiction where the extension or availability
of the Placing would breach applicable law (a "Restricted
Jurisdiction"). This Announcement and the information contained
herein are not for publication or distribution, directly or
indirectly, to persons in a Restricted Jurisdiction unless
permitted pursuant to an exemption under the relevant local law or
regulation in any such jurisdiction. No action has been taken by
K&C REIT plc or Arden or any of their affiliates or agents that
would permit an offer of the Placing Shares or possession or
distribution of this Announcement or any other publicity material
relating to such Placing Shares in any jurisdiction where action
for that purpose is required. Persons receiving this Announcement
are required to inform themselves about and to observe any such
restrictions.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Announcement should seek appropriate advice before taking
any action.
Arden is authorised and regulated in the United Kingdom by the
FCA and is acting exclusively for the Company and no one else in
connection with the Placing and Admission and will not regard any
other person (whether or not a recipient of this announcement) as a
client in relation to the Placing or Admission, and will not be
responsible to anyone other than the Company for providing the
protections afforded to its respective clients or for affording
advice in relation to the Placing, Admission or any other matters
referred to in this announcement.
By participating in the Placing, each person who is invited to
and who chooses to participate in the Placing (a "Placee") by
making or accepting an oral and/or written legally binding offer to
subscribe for Placing Shares is deemed to have read and understood
this Announcement in its entirety (including this Appendix) and to
be providing the representations, warranties, undertakings,
agreements and acknowledgements contained herein.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
REGULATORY, TAX, BUSINESS AND RELATED ASPECTS OF A SUBSCRIPTION FOR
PLACING SHARES.
A circular explaining the background to and reasons for the
Placing (the "Circular") and containing the Notice of General
Meeting is expected to be posted to shareholders on or before 31
October 2017. A copy of the Circular and the Notice of General
Meeting will thereafter be made available on the Company's website:
www.kandc-reit.co.uk
Details of the Placing Agreement and the New Ordinary Shares
Arden is acting as broker for the purposes of the Placing and
has entered into the Placing Offer Agreement with the Company under
which it has agreed to use its reasonable endeavours to procure
Placees to subscribe for New Ordinary Shares in the Placing on the
terms and subject to the conditions set out therein. Arden is
acting as the agent of the Company and for no one else in
connection with the Placing.
The Placing comprises a placing of up to 150,000,000 New
Ordinary Shares (the "Placing Shares") The Placing is not being
underwritten.
Participation in the Placing is only available to persons who
are invited to participate in it by Arden.
Placing Shares are available under the Placing at a price of 100
pence per New Ordinary Share. The Placing Shares will, when issued
and fully paid, include the right to receive all dividends or other
distributions made, paid or declared, if any, by reference to a
record date after the date of their issue.
Each Placee which confirms its agreement to Arden to subscribe
for Placing Shares under the Placing will be bound by these terms
and conditions and will be deemed to have accepted them.
The Company and/or Arden may require any Placee to agree to such
further terms and/or conditions and/or give such additional
warranties and/or representations as they (in their absolute
discretion) see(s) fit. The commitment to acquire Placing Shares
under the Placing will be agreed orally with Arden as agent for the
Company and further evidenced
Application for Admission
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to AIM. Subject to the satisfaction
of the Conditions, it is expected that Admission will take place
and dealings in the Placing Shares will commence on AIM on 27
November 2017.
Bookbuild
Commencing today, Arden, as agent of the Company will be
conducting a bookbuilding process (the "Bookbuilding Process") to
determine demand for participation in the Placing by Placees. This
Appendix gives details of the terms and conditions of, and the
mechanics of participation in, the Placing.
Participation in, and principal terms of, the Bookbuilding
Process
Participation in the Placing is by invitation only and will only
be available to persons who are Relevant Persons and who may
lawfully be, and are, invited to participate by Arden. Arden and
their affiliates are entitled to participate as Placees in the
Bookbuilding Process.
The book for the Placing will open with immediate effect. The
Bookbuilding Process is expected to close not later than 3.00 p.m.
(London) on 22 November 2017, but may be closed at such earlier or
later time as Arden in its absolute discretion, determines. A
further announcement will be made following the close of the
Bookbuilding Process detailing the results of the Bookbuilding
Process and the despatch of the Circular.
A bid in the Bookbuilding Process may only be made on the terms
and conditions in this Announcement and will be legally binding on
the Placee on behalf of which it is made and, except with Arden's
consent, will not be capable of variation or revocation after the
close of the Bookbuilding Process.
A Placee who wishes to participate in the Bookbuilding Process
should communicate its bid by telephone to its usual sales contact
at Arden. Arden will contact and confirm orally to successful
Placees following the close of the Bookbuilding Process the size of
their respective allocations and a trade confirmation will be
despatched as soon as possible thereafter. Arden's oral
confirmation of the size of allocations and each Placee's oral
commitments to accept the same will constitute an irrevocable
legally binding agreement in favour of the Company pursuant to
which each such Placee will be required to accept the number of
Placing Shares allocated to the Placee at the Issue Price and
otherwise on the terms and subject to the conditions set out herein
and in accordance with the Company's articles of association. Each
Placee's allocation and commitment will be evidenced by a trade
confirmation issued to such Placee by Arden. The terms of this
Appendix will be deemed incorporated in that trade
confirmation.
Arden reserves the right to scale back the number of Placing
Shares to be subscribed by any Placee in the event that the Placing
is oversubscribed. Arden also reserves the right not to accept
offers to subscribe for Placing Shares or to accept such offers in
part rather than in whole. The acceptance and, if applicable,
scaling back of offers shall be at the absolute discretion of
Arden.
Following the oral confirmation referred to above, each Placee
will have an immediate, separate, irrevocable and binding
obligation, owed to Arden to pay to Arden (or as Arden may direct)
in cleared funds an amount equal to the product of the Issue Price
and the number of Placing Shares allocated to such Placee.
To the fullest extent permissible by law, none of the Company,
Arden, any of their affiliates nor any person acting on their
behalf shall have any liability to Placees (or to any other person
whether acting on behalf of a Placee or otherwise). In particular,
neither the Company, Arden, nor any of their affiliates or any
person acting on their behalf shall have any liability (including,
to the extent legally permissible, any fiduciary duties), in
respect of the conduct of the Bookbuilding Process or of such
alternative method of effecting the Placing as Arden, in
consultation with the Company may in its sole discretion
determine.
All obligations of Arden under the Placing will be subject to
fulfilment of the Conditions.
Conditions of the Placing
The Placing has not been underwritten and is conditional, inter
alia, upon:
(a) the passing of certain Resolutions at the General Meeting or any adjournment thereof;
(b) the minimum gross proceeds being committed under the Placing;
(c) the Placing Agreement becoming unconditional in all respects
(other than Admission) and not having been terminated in accordance
with its terms; and
(d) Admission occurring by not later than 8:00 a.m. 8 December
2017 (or such later time and/or date as the Company and Arden may
agree.)
In the event that the Company, in consultation with Arden,
wishes to reduce the Minimum Gross Proceeds amount, the Company
will be required to notify investors via an RIS announcement.
If the conditions to which the Placing is subject are not
satisfied or, if applicable, waived the Placing will not proceed,
the Placing will lapse and each Placee's rights and obligations
hereunder shall cease and determine at such time and no claim may
be made by a Placee in respect thereof. Neither the Company, Arden,
nor any of their affiliates shall have any liability to any Placee
(or to any other person whether acting on behalf of a Placee or
otherwise) in respect of any decision as to whether or not to waive
or to extend the time and/or date for the satisfaction of any
condition to which the Placing is subject.
By participating in the Placing, each Placee agrees that its
rights and obligations hereunder terminate only in the
circumstances described below under "Right to terminate". To the
fullest extent permitted by law, each Placee acknowledges and
agrees that it will not be entitled to exercise any remedy of
rescission at any time. This does not affect any other rights the
Placee may have.
Right to terminate
The Placing Agreement contains certain warranties and
indemnities from the Company in favour of Arden. Arden may, in its
absolute discretion terminate the Placing Agreement in certain
circumstances, if, inter alia, the Company fails to comply with its
obligations under the Placing Agreement; if there is a material
adverse change in business, financial or trading position or
prospects of the Company; or if there is a change in the financial,
political, economic or market conditions, which in its reasonable
opinion, acting in good faith, make it impractical or inadvisable
to proceed with the Placing.
By participating in the Placing, each Placee agrees with Arden
that the exercise by Arden of any right of termination or other
discretion under these terms and conditions shall be within the
absolute discretion of Arden and that Arden need not make any
reference to the Placees in this regard and that, to the fullest
extent permitted by law, Arden, any of its affiliates nor any
person acting on their behalf or any of them shall have any
liability whatsoever to the Placees in connection with any such
exercise or failure to so exercise.
No Prospectus
No offering document or prospectus has been or will be prepared
in relation to the Placing and no such prospectus is required (in
accordance with the Prospectus Directive) to be published or
submitted to be approved by the FCA and Placees' commitments will
be made solely on the basis of the information contained in this
Announcement and any information previously published by or on
behalf of the Company by notification to a Regulatory Information
Service.
Each Placee, by accepting a participation in the Placing,
confirms to Arden that it has neither received nor relied on any
information, representation, warranty or statement made by or on
behalf of Arden (other than the amount of the relevant Placing
participation in the oral confirmation given to Placees and the
trade confirmation referred to below), any Affiliate, any persons
acting on its behalf or the Company and none of Arden, its
respective affiliates, nor any persons acting on their behalf will
be liable for the decision of any Placee to participate in the
Placing based on any other information, representation, warranty or
statement which the Placee may have obtained or received
(regardless of whether or not such information, representation,
warranty or statement was given or made by or on behalf of any such
persons). By participating in the Placing, each Placee acknowledges
to and agrees with the Company and Arden that, except in relation
to the information contained in this Announcement, it has relied on
its own investigation of the business, financial or other position
of the Company in deciding whether to participate in the Placing.
Nothing in this paragraph shall exclude the liability of any person
for fraudulent misrepresentation.
Registration and settlement
Settlement of transactions in the Placing Shares following
Admission will take place within the CREST system, using the DVP
mechanism, subject to certain exceptions. Arden reserves the right
to require settlement for and delivery of the Placing Shares to
Placees by such other means as they deem necessary, if delivery or
settlement is not possible or practicable within the CREST system
within the timetable set out in this Announcement or would not be
consistent with the regulatory requirements in the Placee's
jurisdiction.
Each Placee allocated Placing Shares in the Placing will be sent
a trade confirmation stating the number of Placing Shares allocated
to it, the Issue Price, the aggregate amount owed by such Placee to
the Company and settlement instructions. Placees should settle
against the CREST ID for Arden shown below. Subject to satisfaction
or waiver of the conditions to which the Placing is subject, it is
expected that such trade confirmation will be despatched on the
expected trade date shown below. Each Placee agrees that it will do
all things necessary to ensure that delivery and payment is
completed in accordance with either the standing CREST or
certificated settlement instructions which it has in place with
Arden.
The Company will deliver the Placing Shares to a CREST account
operated by Arden and Arden will enter its delivery (DEL)
instruction into the CREST system. Arden will hold the Placing
Shares delivered to this account as nominee for the Placees. The
input to CREST by a Placee of a matching or acceptance instruction
will then allow delivery of the relevant Placing Shares to that
Placee against payment.
The expected timetable for settlement will be as follows:
Trade Date: 24 November 2017
Settlement Date: 27 November 2017
ISIN Code: GB00BYWK1Q82
SEDOL: BYWK1Q8
Deadline for input instruction 3.00p.m. on 24
into CREST: November 2017
CREST ID for Arden: DAQAQ
It is expected that settlement will take place on the Settlement
Date shown above on a DVP basis in accordance with the instructions
set out in the trade confirmation unless otherwise notified by
Arden.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of two percentage points above the base rate of
Barclays Bank plc.
Each Placee is deemed to agree that if it does not comply with
these obligations, the Company may sell any or all of the Placing
Shares allocated to the Placee on such Placee's behalf and retain
from the proceeds, for the Company's own account and profit, an
amount equal to the aggregate amount owed by the Placee plus any
interest due. The Placee will, however, remain liable for any
shortfall below the aggregate amount owed by such Placee and it may
be required to bear any stamp duty or stamp duty reserve tax
(together with any interest or penalties) which may arise upon the
sale of such Placing Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or
settlement agent, the Placee should ensure that the trade
confirmation is copied and delivered immediately to the relevant
person within that organisation.
Insofar as Placing Shares are registered in the Placee's name or
that of its nominee or in the name of any person for whom the
Placee is contracting as agent or that of a nominee for such
person, such Placing Shares will, subject as provided below, be so
registered free from any liability to PTM levy, stamp duty or stamp
duty reserve tax. If there are any circumstances in which any other
stamp duty or stamp duty reserve tax is payable in respect of the
issue of the Placing Shares, neither the Company nor Arden shall be
responsible for the payment thereof. Placees will not be entitled
to receive any fee or commission in connection with the
Placing.
Representations, warranties and terms
By agreeing to subscribe for Placing Shares, each Placee which
enters into a commitment to subscribe for Placing Shares will (for
itself and any person(s) procured by it to subscribe for Placing
Shares and any nominee(s) for any such person(s)) be deemed to
represent, warrant and acknowledge to each of the Company, AIFM,
the Registrar and Arden that:
1) in agreeing to subscribe for Placing Shares under the Placing
it is relying solely on this announcement and any supplementary
announcement issued by the Company and not on any other information
given, or representation or statement made at any time, by any
person concerning the Company or the Placing. It agrees that none
of the Company, the AIFM, Arden or the Registrar, nor any of their
respective officers, agents, or employees, will have any liability
for any other information or representation. It irrevocably and
unconditionally waives any right it may have in respect of any
other information or representation;
2) if the laws of any territory or jurisdiction outside the
United Kingdom are applicable to its agreement to subscribe for
Placing Shares under the Placing it warrants that it has complied
with all such laws, obtained all governmental and other consents
which may be required complied with all requisite formalities and
paid any issue, transfer or other taxes due in connection with its
application in any territory and that it has not taken any action
or omitted to take any action which will result in the Company, the
AIFM, Arden or the Registrar or an of their respective officers,
agents or employees acting in breach of the regulatory or legal
requirements, directly or indirectly, of any territory or
jurisdiction outside the United Kingdom in connection with the
Placing;
3) it has carefully read and understands this announcement in
its entirety and acknowledges that it is acquiring Placing Shares
on the terms and subject to the conditions set out in this Appendix
and the Articles as in force at the date of Admission of the
Placing Shares;
4) it has not relied on Arden or any person affiliated with
Arden in connection with any investigation of the accuracy of any
information contained in this announcement;
5) the content of this announcement is exclusively the
responsibility of the Company, the Directors and the Proposed
Director and neither Arden nor any person acting on its behalf nor
any of its affiliates are responsible for or shall have any
liability for any information, representation or statement
contained in this announcement or any information published by or
on behalf of the Company and will not be liable for any decision by
a Placee to participate in the Placing based on any information,
representation or statement contained in this announcement or
otherwise;
6) it acknowledges that no person is authorised in connection
with the Placing to give any information or make any representation
other than as contained in this announcement and, if given or made,
any information or representation must not be relied upon as having
been authorised by the Company, the AIFM, or Arden;
7) it is not applying as, nor is it applying as nominee or agent
for, a person who is or may be liable to notify and account for tax
under the Stamp Duty Reserve Tax Regulations 1986 at any of the
increased rates referred to in section 67, 70, 93 or 96 of the
Finance Act 1986 (depositary receipts and clearance services);
8) if it is within the United Kingdom, it is a person who falls
within Articles 49(2)(a) to (d) or 19(5) of the Financial Services
and Markets Act 2000 (Financial Promotions) Order 2005 or it is a
person to whom the Placing Shares may otherwise lawfully be offered
under such Order and/or is a person who is a "professional client"
or an "eligible counterparty" within the meaning of Chapter 3 of
the FCA's Conduct of Business Sourcebook or, if it is receiving the
offer in circumstances under which the laws or regulations of a
jurisdiction other than the United Kingdom would apply, it is a
person to whom the Placing Shares may be lawfully offered under
that other jurisdiction's laws and regulations;
9) if it is a resident in the EEA (other than the United Kingdom):
(a) it is a qualified investor within the meaning of the law in
the relevant Member State implementing Article 2(1)(e)(i), (ii) or
(iii) of the Prospectus Directive 2003/71/EC; and
(b) if that relevant Member State has implemented the AIFMD,
that it is a person to whom the New Ordinary Shares may lawfully be
marketed under the AIFMD or under the applicable implementing
legislation (if any) of that relevant Member State;
10) in the case of any Placing Shares acquired by a Placee as a
financial intermediary within the EEA (other than the United
Kingdom) as that term is used in Article 3(2) of the Prospectus
Directive:
(a) the Placing Shares acquired by it in the Placing have not
been acquired on behalf of, nor have they been acquired with a view
to their offer or resale to, persons in any relevant Member State
other than qualified investors, as that term is defined in the
Prospectus Directive 2010/73/EU, or in circumstances in which the
prior consent of Arden has been given to the offer or resale;
or
(b) where Placing Shares have been acquired by it on behalf of
persons in any relevant Member State other than qualified
investors, the offer of those Placing Shares to it is not treated
under the Prospectus Directive as having been made to such
persons;
11) it does not have a registered address in, and is not a
citizen, resident or national of, any jurisdiction in which it is
unlawful to make or accept an offer of the Placing Shares and it is
not acting on a nondiscretionary basis for any such person;
12) if it is outside the United Kingdom, neither this
announcement nor any other offering, marketing or other material in
connection with the Placing constitutes an invitation, offer or
promotion to, or arrangement with, it or any person whom it is
procuring to subscribe for Placing Shares pursuant to the Placing
unless, in the relevant territory, such offer, invitation or other
course of conduct could lawfully be made to it or such person and
such documents or material could lawfully be provided to it or such
person and Placing Shares could lawfully be distributed to and
subscribed and held by it or such person without compliance with
any unfulfilled approval, registration or other regulatory or legal
requirements;
13) if the Placee is a natural person, such Placee is not under
the age of majority (18 years of age in the United Kingdom) on the
date of such Placee's agreement to subscribe for Placing Shares
under the Placing and will not be any such person on the date any
such agreement to subscribe under the Placing is accepted;
14) it has not, directly or indirectly, distributed, forwarded,
transferred or otherwise transmitted this announcement or any other
offering materials concerning the Placing or the Placing Shares to
any persons within the United States or to any US Persons, nor will
it do any of the foregoing;
15) it represents, acknowledges and agrees to the
representations, warranties and agreements as set out under the
heading "United States purchase and transfer restrictions",
below;
16) it acknowledges that neither Arden nor any of its
affiliates, nor any person acting on its behalf is making any
recommendations to it, advising it regarding the suitability of any
transactions it may enter into in connection with the Placing or
providing any advice in relation to the Placing and participation
in the Placing is on the basis that it is not and will not be a
client of Arden and that Arden do not have any duties or
responsibilities to it for providing the protections afforded to
their clients or for providing advice in relation to the Placing
nor in respect of any representations, warranties, undertakings or
indemnities otherwise required to be given by the Placee in
connection with the Placee's application under the Placing;
17) it acknowledges that where it is subscribing for Placing
Shares for one or more managed, discretionary or advisory accounts,
it is authorised in writing for each such account:
(a) to subscribe for the Placing Shares for each such
account;
(b) to make on each such account's behalf the representations,
warranties and agreements set out in this announcement; and
(c) to receive on behalf of each such account any documentation
relating to the Placing in the form provided by the Company or
Arden; and it agrees that the provisions of this paragraph shall
survive any resale of the Placing Shares by or on behalf of any
such account;
18) it irrevocably appoints any director of the Company and any
director of Arden to be its agent and on its behalf (without any
obligation or duty to do so), to sign, execute and deliver any
documents and do all acts, matters and things as may be necessary
for, or incidental to, its subscription for all or any of the
Placing Shares for which it has given a commitment under the
Placing, in the event of its own failure to do so;
19) it accepts that if the Placing does not proceed or the
conditions to the Placing Agreement are not satisfied or the
Placing Shares for which valid applications are received and
accepted are not admitted to trading on AIM for any reason
whatsoever then neither Arden nor the Company, nor persons
controlling, controlled by or under common control with any of them
nor any of their respective employees, agents, officers, members,
stockholders, partners or representatives, shall have any liability
whatsoever to it or any other person;
20) in connection with its participation in the Placing it has
observed all relevant legislation and regulations;
21) it acknowledges that Arden and the Company are entitled to
exercise any of their rights under the Placing Agreement or any
other right in their absolute discretion without any liability
whatsoever to it;
22) the representations, undertakings and warranties contained
in this announcement are irrevocable. It acknowledges that Arden
and the Company and their respective affiliates will rely upon the
truth and accuracy of the foregoing representations and warranties
and it agrees that if any of the representations or warranties made
or deemed to have been made by its subscription of the Placing
Shares are no longer accurate, it shall promptly notify Arden and
the Company;
23) where it or any person acting on behalf of it is dealing
with Arden, any money held in an account with Arden on behalf of it
and/or any person acting on behalf of it will not be treated as
client money within the meaning of the relevant rules and
regulations of the FCA which therefore will not require Arden to
segregate such money, as that money will be held by Arden under a
banking relationship and not as trustee;
24) any of its clients, whether or not identified to Arden, will
remain its sole responsibility and will not become clients of Arden
for the purposes of the rules of the FCA or for the purposes of any
other statutory or regulatory provision;
25) it accepts that the allocation of Placing Shares shall be
determined by Arden, as agent for the Company, in its absolute
discretion (in consultation with the Company to the extent required
by the FCA's Conduct of Business Sourcebook) and that Arden may
scale down any commitments for this purpose on such basis as it may
(in consultation with the Company) determine;
26) time shall be of the essence as regards its obligations to
settle payment for the Placing Shares and to comply with its other
obligations under the Placing;
27) its commitment to acquire Placing Shares will be agreed
orally with Arden, as agent for the Company, and that a Contract
Note or Placing Confirmation will be issued by Arden as soon as
possible thereafter. That oral confirmation will constitute an
irrevocable, legally binding commitment upon that person (who at
that point will become a Placee) in favour of the Company and Arden
to subscribe for the number of Placing Shares allocated to it at
the Placing Price on the terms and conditions set out in this
Appendix and, as applicable, in the Contract Note or Placing
Confirmation. Except with the consent of Arden, such oral
commitment will not be capable of variation or revocation after the
time at which it is made; and
28) its allocation of Placing Shares under the Placing will be
evidenced by the Contract Note or Placing Confirmation, as
applicable, confirming:
(a) the number of Placing Shares that such Placee has agreed to
subscribe for;
(b) the aggregate amount that such Placee will be required to
pay for such Placing Shares; and
(c) settlement instructions to pay Arden as agent for the
Company.
The acknowledgements, agreements, undertakings, representations
and warranties referred to above are given to the Company and Arden
and, where relevant, each of their affiliates and any person acting
on their behalf and are irrevocable.
The terms of this Appendix will be deemed to be incorporated
into that Contract Note or Placing Confirmation. The Company
reserves the right to reject all or part of any offer to subscribe
for Placing Shares for any reason. The Company also reserves the
right to sell fewer than all of the Placing Shares offered by this
announcement or to sell to any purchaser fewer than all of the
Placing Shares a Placee has offered to subscribe for.
Money Laundering
Each Placee acknowledges and agrees that:
1) its application is only made on the basis that it accepts
full responsibility for any requirement to verify the identity of
its clients and other persons in respect of whom it has applied. In
addition, it warrants that it is a person:
(a) subject to the Money Laundering Regulations 2007 in force in
the United Kingdom; or
(b) subject to the Money Laundering Directive (2005/60/EC of the
European Parliament and of the EC Council of 26 October 2005 on the
prevention of the use of the financial system for the purpose of
money laundering and terrorist financing) (the "Money Laundering
Directive"); or
(c) acting in the course of a business in relation to which an
overseas regulatory authority exercises regulatory functions and is
based or incorporated in, or formed under the law of, a country in
which there are in force provisions at least equivalent to those
required by the Money Laundering Directive; and
2) due to anti-money laundering requirements, Arden and the
Company may require proof of identity and verification of the
source of the payment before the application can be processed and
that, in the event of delay or failure by the applicant to produce
any information required for verification purposes, Arden and the
Company may refuse to accept the application and the subscription
moneys relating thereto. It holds harmless and will indemnify Arden
and the Company against any liability, loss or cost ensuing due to
the failure to process such application, if such information as has
been required has not been provided by it.
The Data Protection Act
Each Placee acknowledges and agrees that, pursuant to The Data
Protection Act 1998 (the "DP Act") the Company and/or the Registrar
and/or the AIFM, may hold personal data (as defined in the DP Act)
relating to past and present Shareholders. Personal data may be
retained on record for a period exceeding six years after it is no
longer used. The Registrar will only process such information for
the purposes set out below (collectively, the "Purposes"), being
to:
a) process its personal data (including sensitive personal data
as defined in the DP Act) to the extent and in such manner as is
necessary for the performance of their obligations under their
respective service contracts, including as required by or in
connection with its holding of New Ordinary Shares, including
processing personal data in connection with credit and money
laundering checks on it;
b) communicate with it as necessary in connection with its
affairs and generally in connection with its holding of New
Ordinary Shares;
c) provide personal data to such third parties as the Registrar
may consider necessary in connection with its affairs and generally
in connection with its holding of New Ordinary Shares or as the DP
Act may require, including to third parties outside the European
Economic Area;
d) without limitation, provide such personal data to their
affiliates, the Company or the AIFM and their respective associates
for processing, notwithstanding that any such party may be outside
the European Economic Area; and
e) process its personal data for the Registrar's internal
administration.
By becoming registered as a holder of New Ordinary Shares a
person becomes a data subject (as defined in the DP Act) and is
deemed to have consented to the processing by the Company, the
Registrar or the AIFM of any personal data relating to them in the
manner described above. In providing the Registrar with
information, it hereby represents and warrants to the Registrar
that it has obtained the consent of any data subject to the
Registrar, and their respective affiliates and group companies,
holding and using their personal data for the Purposes (including
the explicit consent of the data subjects for the processing of any
sensitive personal data for the Purposes set out above in this
paragraph 6).
United States Purchase and Transfer Restrictions
By participating in the Placing, each Placee acknowledges and
agrees that it will (for itself and any person(s) procured by it to
subscribe for Placing Shares and any nominee(s) for any such
person(s)) be further deemed to represent and warrant to each of
the Company, the AIFM, the Registrar and Arden that:
1) it is either:
(a) not a US Person, is not located within the United States, is
acquiring the Placing Shares in an offshore transaction meeting the
requirements of Regulation S and is not acquiring the Placing
Shares for the account or benefit or a US Person; or
(b) a US Person to whom Placing Shares may be offered pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the US Securities Act and in
compliance with any applicable securities laws of any state or
other jurisdiction in the United States;
2) it acknowledges that the Placing Shares have not been and
will not be registered under the US Securities Act or with any
securities regulatory authority of any state or other jurisdiction
of the United States and may not be offered or sold in the United
States or to, or for the account or benefit of, US Persons except
in a transaction exempt from, or not subject to, the registration
requirements of the US Securities Act and in compliance with all
applicable state securities laws and under circumstances that would
not require the Company to register under the US Investment Company
Act;
3) it acknowledges that the Company has not and will not be
registered under the US Investment Company Act;
4) if in the future the Placee decides to offer, sell, transfer,
assign or otherwise dispose of its Placing Shares, it will do so
only in compliance with an exemption from the registration
requirements of the US Securities Act and under circumstances which
will not require the Company to register under the US Investment
Company Act. It acknowledges that any sale, transfer, assignment,
pledge or other disposal made other than in compliance with such
laws;
5) it is purchasing the Placing Shares for its own account or
for one or more investment accounts for which it is acting as a
fiduciary or agent, in each case for investment only, and not with
a view to or for sale or other transfer in connection with any
distribution of the Placing Shares in any manner that would violate
the US Securities Act, the US Investment Company Act or any other
applicable securities laws;
6) it acknowledges that the Company reserves the right to make
inquiries of any holder of the New Ordinary Shares or interests
therein at any time as to such person's status under US federal
securities laws;
7) it is entitled to acquire the New Ordinary Shares under the
laws of all relevant jurisdictions which apply to it, it has fully
observed all such laws and obtained all governmental and other
consents which may be required thereunder and complied with all
necessary formalities and it has paid all issue, transfer or other
taxes due in connection with its acceptance in any jurisdiction of
the Placing Shares and that it has not taken any action, or omitted
to take any action, which may result in the Company, the AIFM, the
Registrar, Arden or their respective members, directors, officers,
agents, employees and advisers being in breach of the laws of any
jurisdiction in connection with the Placing or its acceptance of
participation in the Placing;
8) it has received, carefully read and understands this
announcement, and has not, directly or indirectly, distributed,
forwarded, transferred or otherwise transmitted this announcement
or any other presentation or offering materials concerning the
Placing Shares to within the United States or to any US Persons,
nor will it do any of the foregoing; and
9) if it is acquiring any Placing Shares as a fiduciary or agent
for one or more accounts, the Placee has sole investment discretion
with respect to each such account and full power and authority to
make such foregoing representations, warranties, acknowledgements
and agreements on behalf of each such account.
The Company, the AIFM, the Registrar, Arden and their respective
members, directors, officers, agents, employees, advisers and
others will rely upon the truth and accuracy of the foregoing
representations, warranties, acknowledgments and agreements.
If any of the representations, warranties, acknowledgments or
agreements made by the Placee are no longer accurate or have not
been complied with, the Placee will immediately notify the Company
and Arden.
Supply and Disclosure of Information
If Arden, the Registrar or the Company or any of their agents
request any information about a Placee's agreement to subscribe for
Placing Shares under the Placing, such Placee must promptly
disclose it to them.
Non-United Kingdom Investors
If the Placee is outside the United Kingdom, neither this
announcement nor any other offering, marketing or other material in
connection with the Placing constitutes an invitation, offer or
promotion to, or arrangement with, it or any person whom it is
procuring to subscribe for Placing Shares pursuant to the Placing
unless, in the relevant territory, such offer, invitation or other
course of conduct could lawfully be made to it or such person and
such documents or materials could lawfully be provided to it or
such person and Placing Shares could lawfully be distributed to and
subscribed and held by it or such person without compliance with
any unfulfilled approval, registration or other regulatory or legal
requirements.
None of the Placing Shares has been or will be registered under
the laws of the United States, Canada, Australia, the Republic of
South Africa or Japan. Accordingly, the Placing Shares may not be
offered, sold, issued or delivered, directly or indirectly, within
any of the United States, Canada, Australia, the Republic of South
Africa or Japan or to any US Person or to any national, resident or
citizen of Canada, Australia, the Republic of South Africa or Japan
unless an exemption from any registration requirement is
available.
Miscellaneous
The rights and remedies of the Company, the AIFM, Arden and the
Registrar under these terms and conditions are in addition to any
rights and remedies which would otherwise be available to each of
them and the exercise or partial exercise of one will not prevent
the exercise of others.
On application, if a Placee is a discretionary fund manager,
that Placee may be asked to disclose in writing or orally the
jurisdiction in which its funds are managed or owned. All documents
provided in connection with the Placing will be sent at the
Placee's risk. They may be returned by post to such Placee at the
address notified by such Placee.
Each Placee agrees to be bound by the Articles once the Placing
Shares, which the Placee has agreed to subscribe for pursuant to
the Placing, have been acquired by the Placee. The contract to
subscribe for Placing Shares under the Placing and the appointments
and authorities mentioned in this announcement and all disputes and
claims arising out of or in connection with its subject matter or
formation (including non-contractual disputes or claims) will be
governed by, and construed in accordance with, the laws of England
and Wales. For the exclusive benefit of the Company, the AIFM,
Arden and the Registrar, each Placee irrevocably submits to the
jurisdiction of the courts of England and Wales and waives any
objection to proceedings in any such court on the ground of venue
or on the ground that proceedings have been brought in an
inconvenient forum. This does not prevent an action being taken
against the Placee in any other jurisdiction.
In the case of a joint agreement to subscribe for Placing Shares
under the Placing, references to a "Placee" in these terms and
conditions are to each of the Placees who are a party to that joint
agreement and their liability is joint and several.
Arden and the Company expressly reserve the right to modify the
Placing (including, without limitation, the timetable and
settlement) at any time before allocations are determined. The
Placing is subject to the satisfaction of the conditions contained
in the Placing Agreement and the Placing Agreement not having been
terminated.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEMIBATMBATMJR
(END) Dow Jones Newswires
October 24, 2017 02:00 ET (06:00 GMT)
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