Abrdn Property Income Trust has confirmed further details of its sale of the majority of its real estate portfolio for £351 million and the proposed timing of the wind-down of the business.
In a stock market announcement reporting its interim results, Abrdn said the Trust undertook a strategic review in the second half of 2023 prompted by concerns about its size, lack of liquidity in its shares, the discount to net asset value (NAV) and uncovered dividend. The outcome saw the Board recommended to shareholders a proposed merger with Custodian REIT, as reported.
That proposal did not secure enough backing from shareholders at the Extraordinary General Meeting and on 28 May 2024, approximately 96% of shareholders voted in favour of a new proposal to "realise all existing assets in its portfolio in an orderly manner".
Since then, the Trust said the Board has looked at all potential disposal strategies, including individual property sales alongside a wider portfolio transaction, and through an independent agent the whole portfolio was marketed to potential buyers in an "extensive and competitive process".
As revealed by CoStar News last week, the Board today confirmed it has selected a preferred bidder and has agreed a transaction with GoldenTree Asset Management for the sale of the entire share capital of Abrdn Property Holdings, the wholly owned subsidiary of the company.
The transaction comprises the sale of 39 assets, or its entire investment property portfolio, with the exception of its interest in land at Far Ralia, which will be retained by the company for sale at a later date.
The trust’s portfolio comprises mostly industrial properties, 47.7% as a percentage of net assets, followed by retail (24.8%) and office (20.8%). Assets include the Symphony industrial estate in Rotherham; 54 Hagley Road, an office in Birmingham; Whitehorse Business Park in Shellingford; the B&Q retail warehouse in Halesown; and Tetron 141 in Swadlincote.
GoldenTree's investment sees it backing the parties involved in the proposed launch of Special Opportunities REIT earlier this year, which would have been the first real estate investment trust listing on the London market in three years. Those plans were dropped after the minimum fundraising of £500 million was not reached.
Commitments had been received from three investors – GoldenTree Asset Management, TR Property Investment Trust and other Columbia Threadneedle investments funds, and the Bhavnani family office – to subscribe for between 104 million and 119 million ordinary shares, or £104 million to £119 million, on the basis of the target initial issue. The internally managed REIT later said that management would execute its strategy in the private markets instead.
ACRE Capital Real Estate is advising the buyer; Gerald Eve is advising Abrdn Property Income Trust.
Abrdn Property Income Trust’s debt facility with RBSI will be transferred in full to GoldenTree. The cash consideration for the purchase is £351 million.
GoldenTree has paid a cash deposit of £35.1 million, with the balance payable in cash on completion which is expected to be 29 November 2024.
The price represents a discount of 8 per cent to the company’s external valuation of the portfolio as at 30 June 2024 of £381.6 million, excluding the assets disposed of between 1 July 2024 and the date of the announcement, along with the interest in the land at Far Ralia. It also implies a pro-forma net asset value of the company as at 30 June 2024 of £244 million, equivalent to 64 pence per share.
The company said it continues to be in a strong financial position with unutilised financial resources of £44.4 million available in the form of its revolving credit facilities net of existing cash and financial commitments.
As at the period end the company had a loan-to-value ratio of 28.7%, which sits within the Board’s target range.
It is likely that a liquidator will be appointed shortly after the completion of the sale of the portfolio and the proceeds have been received by the company.