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Tue 22nd Jul 2014 - Max Property Group to sell property portfolio to Blackstone
Max Property Group to sell property portfolio to Blackstone: Max Property Group is to sell its entire property business to Marina Topco (Jersey), a company controlled by Blackstone Real Estate Partners Europe IV in a deal valuing the group, before exit costs, at £447.7 million (inclusive of the recently approved return to shareholders of £33 million), equivalent to an enterprise value for the group of more than £650 million. Among the assets acquired by Max was a portfolio of 29 Enterprise Inns pubs bought for £42.5m in January 2011 on a sale and leaseback deal with the company. The proposed transaction comprises the sale for £414.2 million in cash of MPG Opco, a wholly owned subsidiary of the company, which owns the entire property business of the group. The price excludes £33 million cash being returned by the company to shareholders on 23 July 2014 and £500,000 of cash retained by the company. The sale is conditional only on approval by more than 50% of the votes cast at the Extraordinary General Meeting. Irrevocable undertakings to vote in favour of the Resolutions at the Extraordinary General Meeting have already been received from holders representing 46% of the company’s shares. The valuation of the group (net of exit costs) at £447.7 million reflects a 22% increase over the net assets (adjusted to add back provisions for management incentives for a like for like comparison) reported in the Group’s 31 March 2014 annual report. This represents an uplift of 112% in headline net asset value before incentive provisions over the five and a quarter years since Max was established with a limited life strategy. The net cash return to shareholders following completion of the proposals, net of all exit costs and inclusive of the £33 million cash distribution payable on 23 July 2014, is expected to be 184.2 pence per share, representing an annual compound growth rate on net funds invested of 13.2% per annum and a 23% premium to the average share price for the 12 months to 21 July 2014. Following the sale, the business of the group will be substantially complete and the board proposes to oversee a liquidation process during which the majority of the net cash proceeds of the sale will be distributed to shareholders at the earliest opportunity. Max was established in 2009 at a time of turbulence and distress in property, finance and investment markets. At the time of listing, the board anticipated that delivery of the group’s strategy would take some seven and a half years, allowing time to build a portfolio, work the assets acquired to enhance value and ultimately for shareholders to benefit from an anticipated upwards trajectory in property values following the expected recovery after the market crash of 2008. Aubrey Adams, chairman of Max Property Group, said: “Max has performed extremely strongly since its listing in 2009, achieving its key objectives of acquiring a substantial portfolio of assets at a time of market distress and managing them intensively to generate market leading returns. As Max was established with a limited life strategy, the Board has always been mindful of its duty to identify the best possible route to crystallise the company’s success in a way that would secure the optimal exit for Shareholders. Management were set robust targets to achieve and will have more than met them with the outcome of this transaction. This approach from Blackstone, one of the world’s largest and best funded property investors, delivers that opportunity at a price which fully recognises Max’s current and future value and - through the structure and timing of the sale and related proposals - offers our shareholders a clean exit with no market or execution risk.”
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