AIM-listed Circle Property has said it will continue offloading assets and returning capital to shareholders in an “orderly” manner after striking a deal to sell its largest property to LXi REIT.
The two parties have exchanged contracts on Kents Hill Park Conference Centre in Milton Keynes for £34.5m. Given the scale of the deal, Circle shareholders will have to approve the sale at a meeting scheduled for 9 March.
If the deal goes ahead, Circle will have sealed the disposal at 1.5% ahead of the asset’s reported book value as of 30 September.
After the deal closes, Circle said it would continue to develop, investing in and managing the remainder of its portfolio of 10 regional property assets. But it added that it would look to sell further assets in the coming years.
“Since admission to AIM, the company has suffered from limited liquidity in its shares and the share price has remained at a significant discount to the company’s NAV,” it said.
“Notwithstanding the strong financial and operational performance of the company since IPO, and strategic execution, the structural discount in the company’s share price relative to its NAV persists. The board has therefore determined to continue to make targeted asset sales in an orderly manner over an extended period of two to three years, if not sooner.”
As part of that strategy, the remuneration committee has agreed to reduce discretionary bonuses for chief executive John Arnold and chief operating officer Edward Olins by 30% and replace some future share awards with cash bonuses based on the speed of disposals. Their base salaries will remain the same.
“The board intends to return the remaining proceeds of the disposal and future asset sales to shareholders in as orderly and efficient manner as possible,” the company said. “It is anticipated that a minimum of two returns of capital will be made and will likely include a tender offer and/or share buyback, the first of which is expected to occur within 12 months of completion of the disposal.”
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