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abrdn Property Income Trust Limited (API) has announced a significant agreement with certain funds and accounts managed by GoldenTree Asset Management LP for the sale of its wholly-owned subsidiary, abrdn Property Holdings Limited (APH). This transaction encompasses the entire investment property portfolio of API, consisting of 39 assets, with the exception of the land interest at Far Ralia.
Transaction Overview
The total cash consideration for the portfolio is set at £351 million, reflecting an 8% discount from API's external valuation of £381.6 million as of June 30, 2024. GoldenTree has already made a cash deposit of £35.1 million, with the remaining balance to be paid upon completion of the sale. After adjusting for debts and other net assets of APH, the company anticipates net proceeds from the transaction.
The sale implies a pro-forma net asset value of API at £244 million as of June 30, 2024, equating to approximately 64 pence per share. This figure is a 12.7% discount to API's reported net asset value per share of 73.3 pence on the same date. Conversely, it represents a premium of 6.66% over the API share price of 60 pence as of September 26, 2024, the closing price just prior to the announcement, and a 20.1% premium over the 53.3 pence share price on May 28, 2024, when API shareholders approved the Managed Wind-Down plan.
Following the completion of the transaction, API plans to initiate returns of capital to shareholders from the proceeds, facilitated through a members' voluntary liquidation. These returns will be contingent upon the net realisation value of the Far Ralia asset, which is currently being marketed, along with adjustments from the completion process, operational costs during the liquidation period, and any tax implications.
Background and Rationale for the Transaction
On May 28, 2024, API's shareholders approved a modification to the company’s investment policy to enter into a Managed Wind-Down. This strategic decision aimed to liquidate all assets within the portfolio in an orderly fashion to repay borrowings and return capital to shareholders, while maximizing the potential value of the assets.
The decision to sell the portfolio to GoldenTree followed a comprehensive and competitive selection process conducted by API and its advisors, focused on identifying a buyer who could meet the company’s objectives of maximizing shareholder returns within a reasonable timeframe. The API Board concluded that this single transaction effectively executes the Managed Wind-Down strategy by providing greater price certainty and faster returns compared to an asset-by-asset disposal.
Importantly, the transaction aligns with API's Managed Wind-Down policy and does not require further approval from shareholders, streamlining the process for executing this strategic decision.
Future Dividend Expectations
As part of the ongoing financial management, API expects to declare a third-quarter dividend of 1 penny per share, consistent with previous guidance. This dividend is anticipated to be distributed before the sale proceeds are allocated to shareholders, ensuring continued value return during the transition period.
