Fairvest Property Holdings have announced the conclusion of two agreements with shareholders of Arrowhead Properties to acquire 50.1% of Arrowhead B shares through the issue of new Fairvest shares at a swap ratio of 1.85 Fairvest shares per Arrowhead B share.
This follows the REIT’s announcement on the 29th of April 2021 that it was interested in acquiring a stake in Arrowhead via privately placed share swap transactions following numerous separate approaches from Arrowhead shareholders.
“We have had positive engagements with both Arrowhead and Fairvest shareholders as demonstrated by the level of support already achieved for this exciting opportunity to unlock sustainable value over time with the aim of creating a more liquid and well rated REIT of scale” comments Fairvest CEO, Darren Wilder.
Fairvest believes that both sets of shareholders, some holding stakes in both companies, would benefit from the opportunities resulting from a larger balance sheet, active asset management activities, further portfolio rationalisation, operational costs efficiencies and a refocused strategy.
“In parallel, we also continue to engage with the Arrowhead team as we believe that Fairvest’s operational and capital allocation track record can add value within our traditional low-income retail focus as well as other sub-classes of investment property,” added Wilder.
As part of the swap transactions, Fairvest will also propose that its shareholders approve the internalisation of its asset management function to drive value-adding cost efficiencies internally and through M&A activity. A board committee of independent non-executive directors is finalising the details of what will be proposed to Fairvest shareholders in this regard.
The transactions are subject to the fulfilment of various conditions including regulatory and shareholder approvals. A circular containing the details of the transactions will be sent to Fairvest shareholders in due course.