- Regional REIT has reached an agreement with The Conygar Investment Company to acquire UK regional office, industrial and retail & retail distribution investment properties valued at around £129m.

Regional REIT says it will acquire the properties by way of purchasing the Special Purpose Vehicles that own the individual assets.

The Company added:

Pursuant to the terms of the proposed acquisition Regional REIT will issue ordinary shares at its EPRA Net Asset Value (30 June 2016), adjusted as agreed between the parties, to acquire the Conygar Property Portfolio at the net asset value of the SPVs, again adjusted as agreed between the parties. The consideration will be satisfied as to £28.0m by the issue of approximately 26.3m Regional REIT ordinary shares to Conygar (subject to adjustment) and the assumption of two existing secured banking facilities (totalling £69.5m). The balance of the consideration will be satisfied by Regional Commercial Midco Limited, a wholly owned subsidiary of Regional REIT, acquiring Conygar ZDP PLC ("Conygar ZDP") (LSE: CICZ), a wholly-owned subsidiary of Conygar, and assuming Conygar's obligations to fund the liabilities of Conygar ZDP (subject to certain agreed adjustments), being approximately £35.7m in relation to zero dividend preference shares ("ZDPs") issued by Conygar ZDP as at the expected date of completion on 24 March 2017.

The total consideration for the proposed acquisition, which includes shared transaction savings and certain balance sheet adjustments agreed between the parties, is subject to a potential net assets adjustment following completion.

The proposed acquisition is conditional upon the approval of Conygar's ordinary shareholders and, separately, of the holders of the ZDPs. In addition, the completion of the proposed acquisition requires the approval of the change of control by the two banks currently providing secured debt facilities to Conygar.

Stephen Inglis, Group Property Director and Chief Investment Officer of London & Scottish Investments, the Asset Manager of Regional REIT, commenting on the proposed transaction, said: "This is a quality investment portfolio secured 'off market', offering substantial asset management opportunities and income growth potential. The transaction is expected to be earnings accretive to Regional REIT, with significant upside potential as we implement our property management projects for each asset and increase occupancy".

"The deal is complementary to the existing asset base of Regional REIT and aligns well with expertise and experience of the Asset Manager. There are the benefits of portfolio scale and coverage, for recycling capital and flexibility of the asset base and for diversifying risk. The spread of properties and tenants further underpins the strength of the Group's income base."

At 1:57pm:

[LON:CIC] Conygar Investment Company The PLC share price was +9.25p at 160.5p

[LON:CICZ] Conygar Zdp Plc share price was +1.75p at 123.25p

[LON:RGL] Regional Reit Limited share price was 0p at 103.5p

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