MEDIA

Equity placement for investment into its growing residential portfolio

19 March 2018

KCR Residential REIT plc ("KCR" or the "Company") announces that it has raised new equity for investment to grow its residential property portfolio through the issuance of 4,507,136 ordinary shares ("Shares") at £0.70.

Highlights

  • KCR has raised new equity capital of £1.56 million and capitalised loans of £1.59 million
  • Capital to be deployed to grow PRS (Private Rented Sector) residential portfolio
  • Debt reduced by £1.1 million to 45 per cent of investment property value, with significant reduction in interest cost
  • Net assets increased by £2.66 million
  • KCR believes that there is a strong pricing opportunity in a buyer's market.

Placement

The placement consists of cash invested into the Company, the novation of the rights to a debt and the conversion of part of the Company's convertible loan note ("CLN") into equity.

  • The capital invested, together with pre-agreed debt facilities, will be used for KCR's investment programme: buying blocks of rented studios, one- and two-bedroom apartments at discounts to market value and asset managing them to deliver rental and capital growth. The uncertainty in the market is delivering particularly good acquisition opportunities - it is currently a buyer's market.
  • the conversion of the CLN reduces KCR's overall debt cost significantly and reduces its debt-to-property value to 45 per cent.

The combination of investing the new capital into revenue-producing property assets and reducing the overall debt cost moves KCR positively forwards towards its goal of paying dividends.

The total new investment in Shares consists of the following subscriptions and conversions:

  • An investment by Energiser Investments Plc (AIM: ENGI) ("Energiser") of £1,704,997 through:
    • a cash payment of £1,210,897 and
    • the novation of the rights to a debt of £494,100 currently owed by Beta Circle Ltd, a property-owning SPV, which will be repaid in October 2018. The loan is secured on property with a loan-to-value of less than 30 per cent. The loan carries a gross annual interest rate of 7.5 per cent
  • A subscription of £299,999.70 by Consumer Refund Service Limited ("CRS") for 428,571 Shares
  • A subscription of £49,999.60 by Michael Davies, KCR's non-executive chairman, for 71,428 Shares
  • The conversion by:
    • Timothy James, property director of KCR, of his holding of £50,000 Loan Notes into 71,428 Shares
    • Serena James of her holding of £50,000 Loan Notes into 71,428 Shares
    • CRS of its holding of £1,000,000 Loan Notes into 1,428,571 Shares.

Energiser will own 24.71 per cent of KCR on the completion of these transactions.

Admission

Application will be made to the London Stock Exchange for the Shares to be admitted to trading on AIM. It is currently expected that Admission will become effective, and that dealings in the Shares will commence on AIM, at 8.00 a.m. on 23 March 2018 ("Admission").

Following Admission, the Company's issued share capital will consist of 9,857,207 Ordinary Shares with voting rights.  KCR does not hold any Ordinary Shares in treasury.

Following Admission, the aforementioned figure of 9,857,207 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, KCR under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

Dominic White, chief executive, commented "This is a very positive step forwards for KCR and puts us in a strong position to acquire the next assets. The investment also represents a vote of confidence in our strategy to build a substantial residential property portfolio that generates secure income flow for shareholders.  The combination of (i) increasing revenues through acquisitions and rental growth, (ii) reducing debt costs and (iii) becoming more efficient as an operating platform moves us closer to being able to pay dividends. We intend to refinance the remaining debt at significantly lower rates and continue to grow revenues through accretive acquisitions from our strong pipeline of investment opportunities."

This announcement contains information which, prior to its disclosure, was inside information for the purpose of the Market Abuse Regulation.

 

Contacts:

KCR Residential REIT plc info@kcrreit.com
Dominic White, Chief executive +44 20 3793 5236
   
Arden Partners plc +44 20 7614 5917
Steve Douglas
Benjamin Cryer
 

 

Notes to Editors:

K&C's objective is to build a substantial residential property portfolio that generates secure income flow for shareholders through the acquisition of SPVs (Special Purpose Vehicles) with inherent historical capital gains. The Directors intend that the group will acquire, develop and manage residential property assets in London and other key residential areas in the UK.

 

1 Details of the person discharging managerial responsibilities / person closely associated
a) Name Timothy James and Serena James
2 Reason for the notification
a) Position/status Director and his spouse
b) Initial notification /Amendment Initial notification
3 Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a) Name KCR Residential REIT plc
b) LEI 213800NTHWVFLSB9CX32
4 Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a) Description of the financial instrument, type of instrument Ordinary shares of 10p each

Identification code ISIN:        GB00BYWK1Q82
b) Nature of the transaction Conversion of Loan Notes into Ordinary Shares in
c) Price(s) and volume(s)
Price(s) Volume(s)
70 pence 142,856
d) Aggregated information
- Aggregated volume
- Price
N/A (Single transaction)
e) Date of the transaction 16 March 2018
f) Place of the transaction Outside a trading venue

1 Details of the person discharging managerial responsibilities / person closely associated
a) Name Michael Davies
2 Reason for the notification
a) Position/status Director
b) Initial notification /Amendment Initial notification
3 Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a) Name KCR Residential REIT plc
b) LEI 213800NTHWVFLSB9CX32
4 Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a) Description of the financial instrument, type of instrument Ordinary shares of 10p each

Identification code ISIN:        GB00BYWK1Q82
b) Nature of the transaction Allotment of Ordinary Shares for cash
c) Price(s) and volume(s)
Price(s) Volume(s)
70 pence 71,478
d) Aggregated information
- Aggregated volume
- Price
N/A (Single transaction)
e) Date of the transaction 16 March 2018
f) Place of the transaction Outside a trading venue

 

 

 

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