Appt of M7 Real Estate Ltd as Investment Adviser

18 May 2020

Alternative Income REIT PLC

(the "Company" or "Group")

APPOINTMENT OF M7 REAL ESTATE LIMITED AS INVESTMENT ADVISER

The Board of Directors of Alternative Income REIT PLC (ticker: AIRE), the owner of a diversified portfolio of 19 UK commercial property assets let on long leases, is pleased to announce that it has  appointed M7 Real Estate Limited ("M7"), a leading specialist in the pan-European, regional, multi-let real estate market, as the Company's Investment Adviser. 

 

During the period between now and 31 March 2021, M7 will undertake a review of each of the Group's assets and the Company's investment policy, with a view to the Company entering into a longer term agreement for M7's services with effect from 1 April 2021. Until 31 March 2021, the agreement is terminable by the Company at any time without notice.

 

The appointment is effective from 14 May 2020 and M7 will provide the Company with advice, support and services including strategy, debt advisory, reporting, fund accounting and investment advisory services together with asset management, operational advice, budgeting and planning for the Group's portfolio.

 

M7 will have delegated authority to act within defined parameters and where decisions outside pre-approved criteria are required, specific approval will be agreed with the Company. M7 will work with the Group's service providers, whose details were set out in the Company's announcement of 25 February 2020.

 

The Board believes that the appointment of M7 will improve the Company's performance and enhance the appeal of the Company over the long term.  With the expertise and resources provided by M7, the aim is to achieve a narrowing of the Company's discount and, in time, attract new investors.

 

The Board believes that the appointment of M7 will provide the Company with access to:

·      M7's experienced and well-resourced team

o  M7 is a leading specialist in the pan-European, regional, multi-let real estate market. Majority owned by its senior managers, it has over 200 employees in 14 countries across Europe, including 120 in the UK. The team manages over 830 properties with a value of circa €5 billion. M7's clients include some of the world's largest real estate investors such as Blackstone, Oaktree, H.I.G. Capital and Starwood Capital.

·      M7's strong track record²

o  M7 has a value oriented investment philosophy combined with an active, hands-on asset management platform. The in-house, on the ground, real estate experience available to the business through its pan-European platform together with its market leading information and data management systems, ensure that M7 can maximise value. M7 has achieved an average geared internal rate of return of 22.6 per cent. per annum since the company was founded in 2009, after fees, costs and expenses, for the UK investment vehicles it has fully exited.

·      M7's proprietary data and market leading information and data management systems

o  M7 utilises the "Coyote" information and data management system, which it developed in-house and subsequently commercialised in 2018.  M7 has used the Coyote system to track individual properties or portfolios of properties from introduction to acquisition (or rejection) for over a decade, allowing it to collect proprietary data on more than 15,000 assets across the UK and Europe, with a total asset value of approximately £31 billion. This databank is constantly expanding and provides M7 with excellent market insight, as well as an extensive pipeline of assets, which are highly advantageous in the sourcing, selecting and leasing of assets.

 

Fees

M7 will be paid an annual fee of 0.5% of the Company's net asset value paid quarterly in advance, subject to a minimum fee of £90,000 per quarter from 1 October 2020.  Until 1 October 2020, there is no fee payable. 

 

Steve Smith, Chairman of Alternative Income REIT PLC, commented:

"The Board welcomes the appointment of M7 who will work with the Group's recently appointed service providers to achieve best value for our shareholders.  We look forward to working closely with such an experienced and well-resourced team with an excellent track record of delivering strong returns to investors. The aim will be to extend M7's contract in the spring of next year if not before."

 

Richard Croft, Chairman of M7 Real Estate added:

"To be appointed by the Board of the Alternative Income REIT PLC is a hugely positive endorsement of the M7 Real Estate platform, allowing us to utilise not only our core asset management skills, where we have a strong track record of value creation, but also our wider strategic investment, fund and debt advisory expertise.  We now look forward to focussing these services on the Company and its portfolio in order to create value for its shareholders."

 

ENQUIRIES

Alternative Income REIT PLC
Steve Smith - Chairman	via Maitland/AMO below
Maitland/AMO (Communications Adviser)
James Benjamin	[email protected] +44(0) 20 7379 5151
Cenkos
Will Rogers	[email protected] +44(0) 20 7397 1920
Rob Naylor	[email protected] +44(0) 20 7397 1922
FTI Consulting (for M7 Real Estate)
Richard Sunderland	[email protected] +44(0) 20 3727 1489

 

The Company's LEI is 213800MPBIJS12Q88F71.

 

Further information on Alternative Income REIT PLC is available at www.alternativeincomereit.com¹

 

About the Group

Alternative Income REIT PLC aims to generate a sustainable, secure and attractive income return for shareholders from a diversified portfolio of UK property investments, predominately in alternative and specialist sectors. The majority of the assets in the Group's portfolio are let on long leases which contain inflation linked rent review provisions, which help to underpin income distributions to shareholders with the potential for income and capital growth.

 

Notes

1     Neither the content of the Company's website, nor the content of any website accessible from hyperlinks on its website or any other website, is incorporated into, or forms part of, this announcement nor, unless previously published on a Regulatory Information Service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.

2      Past performance is no guarantee of future returns.

 

About M7

M7 is a leading specialist in the pan-European, regional, multi-let real estate market. Majority owned by its senior managers, it has over 200 employees in 14 countries across Europe. The team manages over 830 properties with a value of circa €5 billion.

 

M7 identifies value add investment opportunities for investors in the smaller, multi-let sector. This sector is often neglected and considered inefficient due to the small individual lot sizes and the management intensive nature of the underlying assets. M7 typically aggregates numerous individual assets to form larger portfolios with income levels and yields above market averages.

 

M7 has a value oriented investment philosophy combined with an active, hands-on asset management platform. The in-house, on the ground, real estate experience available to the business through its pan-European platform together with its market leading information and data management systems, ensure that M7 can maximise value.

 

M7 was established in 2009 and initially focused on the multi-let industrial sector within the UK, with a key focus on efficient and accurate data management. A number of JVs were created to capitalise on the opportunities available following the global financial crisis. In addition, a workout business was launched to help lenders manage higher yielding secondary assets.

 

The development of the Continental European multi-sector platform was started in 2013 with the objective of providing real estate owners and investors with a first class, European asset management platform. M7's senior management team had previously built such platforms and was able to leverage this experience to create successful operations in the UK, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Luxembourg, the Netherlands, Poland, Portugal and Spain.