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ATLANTIC LEAF PROPERTIES LIMITED - Disposal of retail warehouse and industrial property portfolio based in the United Kingdom

Release Date: 23/04/2019 13:57
Code(s): ALP     PDF:  
 
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Disposal of retail warehouse and industrial property portfolio based in the United Kingdom

Atlantic Leaf Properties Limited
(Incorporated in Jersey)
(Registration Number: 128426)
SEM share code: ALPL.N0000
JSE share code: ALP
ISIN: MU0422N00009
www.atlanticleaf.mu
("Atlantic Leaf" or the "Company")


DISPOSAL OF RETAIL WAREHOUSE AND INDUSTRIAL PROPERTY PORTFOLIO
BASED IN THE UNITED KINGDOM

INTRODUCTION

Shareholders are advised that, on 23 April 2019, Atlantic Leaf, through its wholly-owned subsidiary
Austen Limited (collectively, "Atlantic Leaf"), concluded an agreement to sell its 45.02% interest in
the LMP Retail Warehouse JV Property Unit Trust (the "Unit Trust") which holds a portfolio of 10
retail warehouse and industrial properties in the United Kingdom ("UK") leased to DFS Trading
Limited (the “Portfolio”) as well as its 50% interest in LMP Retail Warehouse JV Management Limited
(the "Manco"), the management business that manages the Portfolio, to LMP Retail Warehouse JV
Holdings Limited and LMP Retail Warehouse Unitholder 2 Limited (the "Buyers") (the
"Transaction").

RATIONALE FOR THE TRANSACTION

The Buyers represent Atlantic Leaf’s existing joint venture ("JV") partner in the Portfolio, and
expressed an interest to buy out the Company’s interest. The board of directors of Atlantic Leaf (the
“Board”) decided that now was an opportune time to dispose of the Company’s interest in the Portfolio.
The timing was favourable for a number of reasons including a pending debt refinance of the Portfolio's
assets and a requirement to fund asset management initiatives in the future. It was determined that the
exit opportunity on offer was the most attractive option. The investment delivered an overall IRR of
over 9% since this was acquired in September 2017.

The sale of the interest in the Portfolio is consistent with Atlantic Leaf's strategic shift away from direct
exposure to the UK retail market. The Company's focus continues to be on expanding its industrial
asset portfolio.

SALIENT TERMS OF THE TRANSACTION

Under the terms of the Transaction agreements, the Company will sell its units in the Unit Trust and
share in the Manco for a price equivalent to 45.02% of the net asset value of the Unit Trust and the
Manco at the date of completion of the Transaction (the "Completion Date"). This equates to
approximately GBP 22.8 million (the "Estimated Purchase Consideration") which will be received
in cash. The Estimated Purchase Consideration will be adjusted upwards or downwards depending of
the actual net asset value of the Unit Trust and the Manco as at the Completion Date.

There are no outstanding conditions to completion and no material warranties or indemnities are
required. The effective date of the Transaction correlates with the Completion Date which is expected
to be 26 April 2019.
DETAILS OF THE PORTFOLIO

Key property information of the Portfolio is set out below. The Board’s allocated pricing for the
Transaction has attributed values as follows:

                                                                                      Weighted
                                                                                      average
                                                                                      rental
                           Geographical                                   GLA         per sq. ft Valuation
 No.   Property            location                 Sector                (sq. ft)    (GBP)      (GBP)
 1     Birmingham          West Midlands            Retail Warehouse        25 770        33.84    10,983,663
 2     Bristol             South West               Retail Warehouse        20 398        50.60    12,736,113
 3     Carlisle DFS        North West               Retail Warehouse        21 554        26.04    5,923,774
 4     Carlisle Wickes     North West               Retail Warehouse        23 401        18.98    4,985,843
 5     Gateshead           North East               Retail Warehouse        28 137        28.74    11,477,311
 6     Glasgow             Scotland                 Retail Warehouse        38 705        24.67    11,082,393
 7     Preston             North West               Retail Warehouse        35 903        30.19    11,566,168
 8     Sunderland          North East               Retail Warehouse        24 751        23.78    6,565,516
 9     Doncaster           Yorkshire & Humber       Industrial             175 842          7.01   19,499,087
 10    Nottingham          East Midlands            Industrial              21 500          5.41   1,777,132

The aggregate transaction costs payable is approximately GBP 140,000. The purchase consideration
receivable for the Portfolio is considered to be the fair market value, as determined by the Board. The
Board is not independent, and its members are not registered as professional valuers or as professional
associate valuers in terms of the Property Valuers Profession Act, No 47 of 2000.

The Portfolio profit attributable to the Unit Trust for the year ended 31 March 2018 was GBP 8,494,931
extracted from the audited financial statements of the Unit Trust which was prepared in terms of
International Financial Reporting Standards.

FORECASTED IMPACT ON EARNINGS AND USE OF PROCEEDS

Based on the current level of earnings, Atlantic Leaf’s investment in the Portfolio was forecasted to
generate earnings of approximately GBP 2.1 million for the remainder of the 2020 financial year, or
annual forecasted earnings of GBP 2.5 million. This forecast financial information has not been
reviewed or reported on by a reporting accountant in terms of Section 8 of the Listings Requirements.

Atlantic Leaf intends to redeploy the sale proceeds into other attractive property investment
opportunities. The Board has identified a pipeline of potential acquisitions in the industrial property
sector of the UK market, and believes that such adjustments to the Company’s overall portfolio will be
beneficial for long-term income and value growth.

Shareholders are also referred to Atlantic Leaf’s results for the year ended 28 February 2019 released
today.

CATEGORISATION OF THE TRANSACTION

The Transaction is classified as a category 2 transaction in terms of paragraph 9.5(a) of the JSE Listings
Requirements and accordingly does not require approval by Atlantic Leaf's shareholders.
Atlantic Leaf has a primary listing on the Main Board of the JSE Limited and a secondary listing on
the Official Market of the Stock Exchange of Mauritius ("SEM").

By order of the Board

23 April 2019

For further information please contact:

South African sponsor
Java Capital                                                                       +27 11 722 3050
Corporate secretary
Ocorian Secretaries (Jersey) Limited                                               +44 1534 507000
SEM authorised representative and sponsor
Perigeum Capital Ltd                                                                 +230 402 0890


This notice is issued pursuant to the JSE Listings Requirements, SEM Listing Rule 15.24 and the
Mauritian Securities Act 2005. The Board accepts full responsibility for the accuracy of the information
contained in this announcement.

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