The trust, which launched six years ago, said in a stock exchange notice today (27 November) that a combination of its high discount and small size had pushed it to consider all options, including pursuing a consolidation, merger, or sale of the trust and its assets.
“The company remains of a size which might deter some potential investors due to lower share liquidity and a higher relative cost base,” it explained.
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Additionally, the trust’s annual target dividend of 5.64 cents (€) per share remains “materially uncovered”, it warned, adding that a target reduction would be required “to achieve a fully covered, sustainable dividend in the foreseeable future”.
The trust has suffered from a double-digit discount for over a year and fell to a new low of 47.1% last month, according to data from the Association of Investment Companies. It is currently trading at a 39.7% discount.
The timing of the strategic review comes as the trust is required to hold a continuation vote at its annual general meeting in June 2024.
“With that in mind, and cognisant of the feedback received from a number of shareholders in recent meetings, the board believes that the current point in time represents an appropriate juncture at which to consider more fully the basis on which the company might best proceed,” it said.
Despite the prospect of a sale or merger, it stressed there was “no certainty” that any changes will result from the review, and a continuation of the trust with a rebased target dividend level “is a potential outcome”.
The board has appointed Investec as its financial adviser to manage the strategic review.
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AELI chair Tony Roper said: “The board’s priority at all times is to act in the best interests of shareholders.
“Whilst we retain a strong conviction in the strategy, today’s proactive decision to launch a strategic review largely reflects the unprecedented macro backdrop that real estate companies are operating against and provides greater optionality to deliver shareholder value.”
The trust also revealed in its quarterly update today that its sterling NAV per share had shrunk 7.1% over the last three months.
It had collected 93% of its expected rental income for Q3, with the outstanding balance predominantly coming from EV manufacturer Arrival.
While negotiations with Arrival remain ongoing, they have not reached a conclusion, and the trust warned that “in the absence of a satisfactory conclusion”, legal proceedings shall continue.
