Secure Income REIT PLC Management proposal for fee reduction (0702E)
25 February 2020 - 10:32PM
UK Regulatory
TIDMSIR
RNS Number : 0702E
Secure Income REIT PLC
25 February 2020
25 February 2020
Secure Income REIT Plc
(the "Company")
Management proposal for fee reduction
The Independent Directors of the Company announce that the
Prestbury advisory team have proposed a reduction in their advisory
fees which has been accepted.
In August 2019 the Company completed the sale of a portfolio of
eight private hospitals at a premium to book value, raising net
cash of GBP164 million (the "Hospitals Disposal"). Since the
Company listed in 2014 its strategy has been to keep a prudent cash
reserve, but to raise significant sums by way of non-dilutive
equity issues only when acquisition targets have been secured. As
announced at the time of the Hospitals Disposal, our assessment was
then, as it remains now, that the surplus cash is best retained by
the Company in order to provide flexibility to optimise the use of
the surplus cash.
While the market uncertainty that prevailed at the time of the
Hospitals Disposal has abated somewhat, the Board of the Company
still believes it is prudent and desirable for the Company to
retain the surplus cash whilst the nature of Brexit is resolved and
the management team continue their search to source value accretive
deals. In the meantime, as indicated at the time of the Hospitals
Disposal, part of the net proceeds have been applied to topping up
dividend payments and the surplus currently stands at some GBP158
million.
The view of the Prestbury team is that charging shareholders for
holding such a significant amount of surplus cash would be
inequitable. They therefore approached the Independent Directors
with the proposal to reduce the advisory fees to the levels that
would be payable if the surplus cash were returned to shareholders.
The fees payable on the surplus cash currently held amounts to some
GBP1.2 million per annum. The Investment Advisory Agreement (as
summarised in the Company's latest annual report) will therefore be
amended such that the surplus cash is excluded from the calculation
of the Company's EPRA NAV for the purposes of calculating the
advisory fee. Surplus cash is defined as the GBP164 million surplus
realised on the Hospitals Disposal net of any amounts deployed to
top up dividends or make special returns to shareholders, deployed
in new investments or used to manage or repay debt. The Company
will include updates on the remaining balance of the surplus cash
in its interim and annual reports to shareholders.
Prestbury believes this to be in the best interests of the
Company and the Independent Directors have accepted this proposal.
The revised documentation is expected to be entered into shortly
and the changes will take effect from the end of the current
calendar quarter. The Independent Directors consider, having
consulted with Stifel Nicolaus Europe Limited, the Company's
nominated adviser, that the terms of the revised Investment
Advisory Agreement are fair and reasonable insofar as its
shareholders are concerned.
Martin Moore, Chairman of Secure Income REIT said:
"The management team is the Company's second largest shareholder
and so is exceptionally closely aligned with all shareholders. They
consider that they should not benefit from temporarily acting as
managers of the Company's unusually high cash balance. The Board
agrees with this proposal and would like to thank the management
team for a proposal that puts the interests of all shareholders
above their entitlement to advisory fee income."
For further information on the Company, please contact:
Secure Income REIT Plc +44 20 7647 7647
Nick Leslau enquiries@SecureIncomeREIT.co.uk
Mike Brown
Sandy Gumm
Stifel Nicolaus Europe Limited
(Nominated Adviser) +44 20 7710 7600
Stewart Wallace stifelsecureincomereit@stifel.com
FTI Consulting
(PR Adviser) +44 20 3727 1000
Dido Laurimore SecureIncomeREIT@fticonsulting.com
Claire Turvey
Eve Kirmatzis
About Secure Income REIT Plc
Secure Income REIT specialises in generating long term,
inflation protected, secure income from real estate investments.
Its investment strategy is designed to satisfy investors' growing
requirements for high quality, safe, inflation protected income
flows.
At 30 June 2019, the Group's investment property portfolio
(adjusted for the sale of eight hospitals after the balance sheet
date) was valued at GBP2.1 billion, producing GBP111.1 million per
annum of rental income from long term leases with a weighted
average unexpired term to expiry of 21.5 years with no breaks. All
rental income is subject to fixed uplifts or RPI upwards only rent
reviews with 59% of rental income subject to RPI-linked reviews and
41% having fixed uplifts.
The Group's portfolio comprises key operating assets let to
strong businesses in defensive sectors with high barriers to entry.
The RPI-linked rent reviews and fixed rental uplifts combine with
fixed cost debt to drive healthy dividend growth, creating
attractive and predictable returns.
The Company is advised by Prestbury Investments Partners
Limited, owned by the team which advised Max Property Group plc
until August 2014, when all of the assets of Max Property Group plc
were sold to Blackstone Group. Prestbury is owned and run by a team
of real estate and finance professionals including Nick Leslau,
Mike Brown, Tim Evans, Ben Walford and Sandy Gumm.
The Company's Board is chaired by Martin Moore together with
three further independent Directors: Leslie Ferrar, Jonathan Lane
and Ian Marcus, as well as three members of the Prestbury Team:
Nick Leslau, Mike Brown and Sandy Gumm.
The Company is a UK REIT which floated on the AIM market of the
London Stock Exchange in June 2014.
The Company's LEI is 213800M1VI451RU17H40
Further information on Secure Income REIT is available at
www.SecureIncomeREIT.co.uk.
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END
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