European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

CA Immo: Raised Offer, Aggregate's Potential Competing Offer

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