Warehouse REIT and Distribution Finance announce fundraising plans 

Summary

• Warehouse REIT and Distribution Finance have separately announced fundraising plans.
• The companies are expected to raise up to £45.9 million and £40 million, respectively.
• Following the announcements, the shares of Warehouse and Distributed Finance fell off by 2 and 16 per cent, respectively.

Warehouse REIT Plc (AIM: WHR) and Distribution Finance Capital Holdings Plc (AIM: DFCH) on Friday, 5 February, separately announced fundraising plans through share placings on the London Stock Exchange. With the proposed share placings, Warehouse REIT and Distribution Finance are expected to raise up to £45.9 million and £40 million, respectively.  

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Shares price action 

Following the announcements, the share prices of Warehouse REIT and Distributed Finance witnessed a fall of 2 and 16 per cent at their specific day’s bottom respectively. As per the data available with the London Stock Exchange, the stock of Warehouse REIT slipped 2.78 per cent to a day’s low of GBX 122.50 from the previous close of GBX 126 apiece.  

Distribution Finance share price collapsed as much as 16.20 per cent to an intraday bottom of GBX 59.50 from the previous close of GBX 71 per share. About 1.11 million and 60,978 shares of Warehouse REIT and Distribution exchanged hands until 1147 GMT.  

Warehouse REIT shares placement 

Warehouse REIT has declared to issue up to 37.93 million new ordinary shares at a price of GBX 121, at a discount of 3.97 per cent from the last closing price of GBX 126. The proceeds from the issue of new ordinary shares will be utilised to acquire two adjacent distribution warehouses in Harlow for a sum of £13.9 million and two more assets.  

The existing facilities with the Warehouse REIT group will also be absorbed in the asset acquisition, the company said in an exchange filing.  

With the ongoing challenges due to Covid-19 and structural changes driven by the e-commerce growth, there is a demand for warehouse space for a diversified occupier base. The acquisition of modern purpose-built assets is likely to outperform wider rental growth forecasts, said Tilstone Partners, the investment adviser to Warehouse REIT.  

Warehouse REIT group has acquired two reversionary freehold distribution units in Harlow, south-east England, for £13.9 million. Other than this, the group is intended to acquire multi-let warehouse estates located in very close proximity to key transportation hubs elsewhere in the UK for an aggregate consideration of £43.5 million.  

Collectively, the three acquisitions worth £57.4 million are likely to provide a blended net initial yield of 6.3 per cent.  

The investors participating in the share placement will be entitled to receive a dividend of GBX 1.55 declared on 26 January. The recently announced dividend is for the third quarter and will be payable on 1 April to all the eligible shareholders on the register as on 5 March.   

Distribution Finance shares placement 

In a bid to raise a sum of £40 million, Distribution Finance has declared to issue nearly 72.73 million new ordinary shares at a share price of GBX 55 apiece. The issuance price of GBX 55 is at a discount of 22.53 per cent from the last closing price of GBX 71. The offering of ordinary shares translates approximately 68.2 per cent of the ordinary shares as at the date of announcement, Distribution Finance said via an exchange filing.  

Distribution Finance is expected to garner a sum of £40 million from the proceeds of the issue, effectively £38.6 million after the expenses. According to Distribution Finance, the net proceeds will be primarily utilised in catalysing the loan book growth and the business plan.  

The funding support, recognised after the successful completion of the issue, is likely to allow the group to offer larger facilities to the customers. As of now, the group is restricted from offering large quantum facilities due to the large exposure limits of the regulator. Also, the proceeds are likely to support the loan book of up to £550 million, removing the present constraint of £270 million. 

Some directors of Distributed Finance have conditionally agreed to subscribe for an aggregate portion of 381,464 ordinary shares in the placement, the company said.  

The placement of shares stand is subject to the approval from shareholders at the general meeting scheduled on 22 February, the company declared. 

Distribution Finance appointed Investec as the nominated advisor for the issue. It also acted as the sole broker and sole bookrunners to the company with regards to the placement of shares.