Thu, 13/09/2018 - 10:05
UK REIT RDI has completed a forward funding agreement to acquire two high quality distribution units in Bicester totalling 288,000 sq ft (26,800 sq m), as well as completing the disposal of the Lochside office in Edinburgh.
These transactions are in line with the company’s strategy of recycling capital out of mature assets and into new growth opportunities.
RDI has acquired approximately 13.5 acres of land in Bicester as part of a GBP26.0 million forward funding opportunity with Albion Land to acquire two high quality distribution units of 120,000 sq ft and 168,000 sq ft respectively. The site is part of the successful Link 9 industrial and distribution development with good access to the M40 and backed by a strong occupier market.
Construction of phase 1 will commence immediately with an approximate eight-month development programme with phase 2 anticipated to commence before May 2019 with completion in late 2019. Both units will be developed on a speculative basis, however early stage discussions have already commenced with potential occupiers. The transaction provides an opportunity to increase RDI’s exposure to well-located modern distribution units at an anticipated yield on cost of 6.5 per cent once let.
RDI completed the disposal of the 60,177 sq ft (5,591 sq m) Lochside Edinburgh office on 31 August 2018 for GBP13.1 million, representing a net initial yield of 5.9 per cent and a 13.7 per cent premium to the last reported market value.
The asset was originally acquired as part of the Company’s AUK Portfolio acquisition in March 2016 for GBP11.0 million at which point it was 18 per cent vacant. Through active asset management the property has been fully let which has supported the sales price and premium to book value.
Mike Watters, Chief Executive, says: “This acquisition once again highlights our disciplined approach to improving the quality of our income focused portfolio, with disposal proceeds being promptly redeployed into growth opportunities. The acquisition of high quality distribution assets in Bicester, through a forward funding agreement, presents a clear opportunity to increase our exposure to a sector with strong structural support and rental growth prospects, at an attractive entry price.”
“We look forward to providing further details on our progress against strategic priorities at our year end results presentation on Thursday 25 October 2018, following the release of the year end results.”
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