Alternative Income REIT sells Wet 'n' Wild Water Park in North Tyneside
Alternative Income REIT, the owner of a diversified portfolio of UK commercial property assets predominantly let on long leases, has sold the Wet ‘n’ Wild Water Park, North Shields, for a total consideration of GBP3,204,500 to Serco Leisure Operating Limited, the tenant and a wholly owned subsidiary of Serco Group plc
The deal represents: a 9.7 per cent uplift on purchase price and a 12.4 per cent premium on book value (as at 30 June 2020); a net exit yield of 6.0 per cent, which compares with the net acquisition yield of 6.2 per cent paid by the Company in September 2017; and generates an un-geared IRR for the Company of 8 per cent per annum and a geared IRR of more than 10 per cent.
The Wet ‘n’ Wild Water Park was pledged as part of the security for the Group’s senior debt financing from Canada Life. The structure of the facility means there is no allocated loan amount, release price or other costs resulting from the sale of the asset. The tenant decided to cease operations at the asset in February 2020.
The Group intends to redeploy the proceeds of the sale into its growing pipeline of accretive investment assets in short order.
The Board notes that the Company’s Investment Adviser, M7 Real Estate Limited (M7), a leading specialist in the pan-European, regional, multi-tenanted real estate market, has purchased and now owns 1,000,000 Ordinary Shares in the Company at a price of 59 pence per share.
Steve Smith, Chairman of Alternative Income REIT plc, says: "We are pleased to have completed the disposal of the Wet ‘n’ Wild Water Park asset at a significant premium to acquisition cost and book value, enabling the Group to recycle the proceeds into an accretive investment in short order.
The acquisition of shares in the Company by M7, the Company’s Investment Adviser, underlines M7’s commitment to the business and confidence in the potential for growth in both the short and longer term. That commitment is underlined by M7’s willingness to onboard the portfolio in May of this year and to undertake the full property and asset management process, unpaid, until 1 October 2020.”