A newly-formed single asset property company has been set up to launch the office-led mixed-use Bridgewater Place development in Leeds on the International Property Securities Exchange (IPSX).
BWP REIT intends to raise £35m before expenses through the issue of 35 million new ordinary shares in the company at an issue price of 100p per share.
The REIT has exchanged contracts to acquire Bridgewater Place – subject to admission, completion of the acquisition and the novation and reinstatement of the vendor’s debt facility of £38.6 million – which was independently valued at £63m in August this year.
The acquisition will initially be undertaken by way of the grant of a 999-year lease of the internal commercial areas of the property to M7 BWP Propco, a wholly-owned subsidiary of the company – the propco will be granted a call option to acquire the freehold titles in the future for £1. The development is set to undergo an extensive refurbishment, including essential fire safety and cladding works.
M7 Real Estate Financial Services will serve as alternative investment fund manager to the company and M7 Real Estate and together with its subsidiaries, will act as asset manager to the propco. M7, either directly or through its affiliates, will own around 8.57% of the company’s share capital after admission.
Edmund Craston, chairman of BWP REIT, said: “BWP REIT presents a compelling opportunity to create value in an asset that has historically suffered from a lack of investment by undertaking a number of essential and cosmetic asset management initiatives.
“Our aim is to execute a programme of works to create a high quality, fully repositioned and energy efficient office space with a strong amenity offer which generates long term secure income from a range of high-quality tenants. Leeds is one of the UK’s main regional cities and suffers from an acute shortage of high quality modern and sustainable office stock, presenting strong fundamentals to underpin the investment opportunity BWP REIT presents.”
Richard Croft, executive chairman of M7, added: “The transaction and the proposed admission of BWP REIT to IPSX Wholesale serves to demonstrate how, in addition to being a market for investors seeking long-term real estate-backed income, IPSX has the potential to solve complex situations for existing property owners while presenting new investors with a strong opportunity to benefit from value creation through the ownership of shares traded on a regulated and liquid exchange.
“In this case there has been insufficient capital to invest in Bridgewater Place for a number of years, meaning that the essential works and cosmetic improvements required to make the property both attractive to office occupiers and investable for yield hungry institutions have not been undertaken. This proposed capital raise and admission, will allow us to fully reposition this high-profile property to create a grade A office asset which meets the needs of the modern and future occupier.”
The company expects to announce the results of the Issue and publish its admission document on or around 25 October 2022 with the admission and commencement of dealings to commence on or around 27 October 2022. WH Ireland is acting as IPSX lead adviser and settlement agent.
