- Two open offers seek to raise a combined £337m
- ASLI and Home Reit cite strong deal pipelines
Investors in two mid-cap real estate investment trusts (Reits) are being asked to help fund expansion plans via two fundraisings set to close later this month.
Aberdeen Standard European Logistics Income (ASLI), which was the best-performing UK-listed Reit on a total return basis in 2020, is tapping investors for £75m to help fund the purchase of a pipeline of so-called mid-box and urban logistics warehouses worth more than €165m (£141m).
The new shares are being sold at 109p each, an 8.4 per cent discount to the last market price immediately prior to the launch of the open offer. That still represents a 2.7 per cent premium to the trust’s net asset value (NAV) at the end of June, which arguably reflects the strong investor appetite and outlook for logistics assets.
“You’re looking at a very happy fund manager,” says investment manager Evert Castelein, speaking about the prospects for the trust, which listed in London in 2017. Castelein cites the relative maturity of the European ecommerce market, alongside Aberdeen’s network of offices to source deals and cheap debt funding from German banks as three reasons why UK investors should look to the continent – and specifically his trust – for rising asset prices and rental growth.
While large logistics groups like the scale provided by big-box assets, the trust’s focus on smaller warehouses reflects its preference for more liquid assets. “What do you think will happen when Amazon comes to you toward the end of a lease and says, ‘we would like to reduce the rent by 30 per cent’?” asks Castelstein. “You’ll be forced to negotiate with your back against the wall.”
ASLI’s current portfolio is split cross 16 assets located in key transport corridors in the Netherlands, France, Germany, Spain and Poland. Shareholders who were on the register on 5 September have until 28 September to take up the offer and are entitled to subscribe for one new share for every four they own.
Rapid growth is also the big selling point for Home Reit (HOME), which has announced plans to raise £262m via the sale of new shares at 109p. The placing – struck at a 4 per discount to the market price, but a 4.2 per cent premium to the group’s unaudited NAV per share – includes an initial offer, intermediaries offer and an open offer for existing subscribers to acquire one new share for every one they already own.
The group, which in less than a year has built a portfolio that offers accommodation for 3,800 homeless people across England, plans to use the proceeds to acquire further homes. Its investment manager, Alvarium, says it has entered advanced negotiations to buy around £400m-worth of properties with an average net initial yield of 5.95 per cent.
The fundraising comes as another investor in supported housing accommodation, the BMO-managed Responsible Housing REIT, seeks to raise up to £250m to acquire a portfolio of assets.
Investors in Home Reit, who saw the proceeds from last year’s public listing deployed within half a year, have until 11am on 22 September to take up the offer. As with ASLI, the offer looks set to boost NAV and diversify rental income. Accept.
