European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Brightbay Real Estate Partners / Event-Driven

On 26 February, Starwood Capital Operations, LLC made an offer to acquire the remaining 70.4% stake in <a href="https://www.smartkarma.com/entities/rdi-reit-plc" target="_blank" data-smartkarma-citation="entities:22107:1" rel="noopener">RDI REIT (RDI LN)</a> PLC for approximately £325 mn.
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The offer price is 121.35p, in cash.
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16.8% discount to the last reported EPRA NNNAV of 145.9p.
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it is also 95.55% of the 52-week high share price.
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Starwood Capital Operations had already purchased (June 2020) a 29.59% stake in RDI; the offer price is c. 28% higher than the acquisition price of that stake. Starwoods' stake in RDI reduces interloper risk.
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Prior to the offer, RDI traded at deep discounts to EPRA NAV due to its portfolio, low share liquidity, unsustainable dividend policy and high leverage. The portfolio has been undergoing recent refocusing.
RDI is a work-in-progress/turnaround situation, whereby RDI will exit from retail and from hotels (in the medium term, when mobility increases and valuations recover) and focus on distribution, industrial and London offices. Starwood is probably one of the most capable players to execute it. There is the chance of a sweetened offer, as it has recently happened in the case of CA Immo (link: <a href="https://www.smartkarma.com/insights/ca-immo-raised-offer-aggregate-s-potential-competing-offer" target="_blank" data-smartkarma-citation="insights:48625" rel="noopener">CA Immo: Raised Offer, Aggregate's Potential Competing Offer</a>). Nevertheless, CA Immo has mainly exposure to Central and Eastern European prime CBD offices, thus its portfolio is more resilient.
The raised offer for CA Immo is 4.5% higher than the initial offer (although in this situation, shares are now trading 2.8% above the raised offer).
RDI closed on 3 March at 123.8p, 2% above the offer price, with 9.63 mn shares traded. There has been a decent volume since the offer announcement. On 4 March, the share is trading 119.4-123.8p.
Starwood is launching an offer at a c.17% discount to EPRA NNNAV. Vaccine-led recovery should mean an increase in value for some of the assets in RDI's increasingly focused portfolio, essentially hotels. RDI has also some prime assets in Central London. LONG at levels around the offer price, on expectations of a sweetened offer.
This offer shows that there are opportunities in listed properties because of the existing discounts to NAV. Moreover, bar exposure to retail, other companies' share prices have not yet fully recovered from the sell off that happened a year ago, at the onset of Covid-19 crisis.

On 26 February, Starwood Capital Operations, LLC made an offer to acquire the remaining 70.4% stake in RDI REIT (RDI LN) PLC for approximately £325 mn.


The offer price is 121.35p, in cash.


16.8% discount to the last reported EPRA NNNAV of 145.9p.


it is also 95.55% of the 52-week high share price.


Starwood Capital Operations had already purchased (June 2020) a 29.59% stake in RDI; the offer price is c. 28% higher than the acquisition price of that stake. Starwoods' stake in RDI reduces interloper risk.


Prior to the offer, RDI traded at deep discounts to EPRA NAV due to its portfolio, low share liquidity, unsustainable dividend policy and high leverage. The portfolio has been undergoing recent refocusing.
RDI is a work-in-progress/turnaround situation, whereby RDI will exit from retail and from hotels (in the medium term, when mobility increases and valuations recover) and focus on distribution, industrial and London offices. Starwood is probably one of the most capable players to execute it. There is the chance of a sweetened offer, as it has recently happened in the case of CA Immo (link: CA Immo: Raised Offer, Aggregate's Potential Competing Offer). Nevertheless, CA Immo has mainly exposure to Central and Eastern European prime CBD offices, thus its portfolio is more resilient.
The raised offer for CA Immo is 4.5% higher than the initial offer (although in this situation, shares are now trading 2.8% above the raised offer).
RDI closed on 3 March at 123.8p, 2% above the offer price, with 9.63 mn shares traded. There has been a decent volume since the offer announcement. On 4 March, the share is trading 119.4-123.8p.
Starwood is launching an offer at a c.17% discount to EPRA NNNAV. Vaccine-led recovery should mean an increase in value for some of the assets in RDI's increasingly focused portfolio, essentially hotels. RDI has also some prime assets in Central London. LONG at levels around the offer price, on expectations of a sweetened offer.
This offer shows that there are opportunities in listed properties because of the existing discounts to NAV. Moreover, bar exposure to retail, other companies' share prices have not yet fully recovered from the sell off that happened a year ago, at the onset of Covid-19 crisis.

RDI REIT - Starwood: Expectations of a Bumped-Up Offer

United Kingdom

Brightbay Real Estate Partners is a real estate investment trust that invests in income-generating commercial properties. Its diversified portfolio includes industrial and logistics assets, offices, and hotels. The company was founded in 2002 and is headquartered in London, United Kingdom.

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Brightbay Real Estate Partners (RDI LN)

RDI REIT - Starwood: Expectations of a Bumped-Up Offer

Vaccine-led recovery should support RDI's increasingly focused portfolio. Starwood sees value in RDI turnaround. LONG at levels around the offer...

Jesus Rodriguez Aguilar

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