Starwood Capital has reached an agreement with RDI REIT’s independent directors to take over the entire share capital of the UK-focused investment firm in a deal valuing the company at £468 mln (€537 mln).
Starwood, which already owns a 29.59% stake in RDI, is offering 121.35 pence for each RDI share, representing a premium of 33% to the closing price of 91% per RDI REIT share on the day prior to the announcement and a discount of 20% to the last reported EPRA NAV of 151.5 pence per RDI REIT Share at 31 August 2020
RDI’s independent directors said that they consider the offer ‘fair and reasonable’.
Starwood has maintained a significant strategic shareholding in RDI REIT since July 2020 as it believes that the firm is well-managed and has an attractive and high-quality real estate portfolio. Nevertheless, RDI REIT has traded at a strong discount to EPRA NAV for the past three years. ‘Given RDI REIT's scale and constrained access to capital, Starwood therefore believes the next stage of RDI REIT's evolution will be better suited to ownership under the control of Starwood,’ the company said in a statement.
Commenting on the acquisition, Gavin Tipper, Chairman of RDI REIT said: ‘Collectively the Board has carefully assessed Starwood's proposed offer, taking into account all relevant factors including the Company's historic share price performance; the short to medium term outlook for the real estate sectors in which the portfolio is invested, in particular hotels and flexible workspace; and, given where we are in the cycle, the future ability of the management to effectively implement the portfolio strategy and recycle capital to deliver on the strategy in the current market.’
He added: ‘While the board believes in the quality of the portfolio and the strength of the management team, the significant uncertainty regarding a market recovery, strategy execution and any narrowing of the share price discount to NAV, means that we believe that recommending this cash offer provides certainty of value and is in the best interest of our shareholders.’
Starwood bought an initial 29.54% stake in RDI in June last year from its previously largest shareholder Redefine Properties.
The new follows a change of leadership within RDI REIT announced last November, when long-time CEO Mike Watters said he would be retiring from RDI and stepping down as an executive director and CEO during December 2020. Stephen Oakenfull, deputy CEO since 2013, succeeded Mike Watters as Chief Executive.
