UK REIT Ediston Property Investment Company (EPIC), which invests in retail warehouses, has agreed the sale of its entire property portfolio to Realty Income as it moots the liquidation of the company.
Realty will acquire 11 retail warehouse assets located across the UK for around £200.8 mln (€234 mln). The 1.18 million ft2 (110,000 m2) portfolio is let to 64 tenants over 108 units.
Completion of the sale is conditional upon shareholder approval at its next general meeting on 26 September. The company's largest shareholder, TR Property Investment Trust, representing approximately 16.41% of the company's issued ordinary share capital, has pledged to vote in favour.
The board announced a strategic review on 16 March in response to several challenges that had been facing the company for some time. These included low levels of liquidity in the ordinary shares; a small market capitalisation that limited the ability of larger investors to achieve their desired quantum of investment commitment; constraints on the company’s ability to diversify across larger schemes in the retail warehouse market due to the relatively small size of the company; and cost inefficiencies from operating a subscale company.
According to EPIC, these challenges stem from the inability of the company to grow through new equity issuance, as its ordinary shares – like those of its peers in the REIT sector – have traded at a material discount to net asset value.
If the disposal becomes unconditional, the board intents to seek shareholder approval for the voluntary liquidation of the company with a view to distributing all of the company's net assets - primarily cash - to shareholders by the end of this calendar year.
Other solutions will only be sought if an 'alternative corporate opportunity' representing 'greater benefit than a simple return of capital' emerges, the board said.
William Hill, EPIC's chairman, commented: 'The board was very pleased with the interest shown in the company, with proposals being received from a number of potential counterparties. Having considered multiple options, and after detailed analysis, the board determined a sale of the entirety of the property portfolio to Realty Income was the best means of maximising shareholder value.
'The board unanimously considers the disposal to be in the best interests of the company and its shareholders as a whole and recommends that shareholders vote in favour of the resolution at the general meeting.'
