RDI sells UK retail parks portfolio for GBP156.9m
RDI, an income focused UK Real Estate Investment Trust (UK-REIT), has exchanged contracts for the disposal of its UK retail parks portfolio of six assets for GBP156.9 million to M7 Real Estate Limited, on behalf of M7 Box+ II.
The deal, which is a sale of the six associated special purpose vehicles, is anticipated to complete in mid-October 2020. The purchase price reflects a 3.0 per cent discount to the last reported 29 February 2020 values and a topped-up net initial yield of 7.5 per cent.
The transaction is a significant milestone in the ongoing repositioning of the Company’s portfolio and reflects a pro-forma reduction in the Group’s overall retail exposure to 11.8 per cent (29 February 2020: 28.4 per cent), including the recently announced disposal of the Schloss Strassen Center in Berlin. As previously announced, EUR50.5 million of German retail assets remain subject to disposal and are at various stages of negotiation.
As at 29 February 2020, and as last reported, the Portfolio had gross annualised rental income of GBP12.5 million, a WAULT of 7.3 years and occupancy of 98.4 per cent. The Portfolio comprises the following assets:
Banbury Cross Retail Park, Banbury;
St David’s Retail Park, Bangor;
Milton Road Retail Park, Edinburgh;
Queens Drive Retail Park, Kilmarnock;
Priory Retail Park, Merton, London; and
The Arches, Watford, London.
The Portfolio forms part of the Group’s GBP275.0 million AUK financing facility which includes a GBP137.5 million revolving credit facility. The all-in interest rate for the facility is currently 3.2 per cent. The anticipated Disposal proceeds of approximately GBP156.9 million will be used to reduce the revolving credit facility by approximately GBP100 million, providing a significant reduction in leverage.
The remaining amount of circa GBP56.9 million will be held as cash within the Group. Cash and facility headroom are anticipated to increase to around GBP240.0 million with approximately GBP140.0 million of that amount held in cash (29 February 2020: GBP85.0 million). Subject to completion, the Group’s pro-forma LTV based on the 29 February 2020 values will be reduced meaningfully to approximately 30.2 per cent. (29 February 2020: 41.8 per cent.).
Mike Watters, CEO at RDI, says: “Together with the disposal of Schloss Strassen Center in Berlin just last week, we have taken a substantial step forward in the implementation of our portfolio strategy in a very short space of time and against a challenging backdrop. In just 18 months since announcing our strategic review, we have undertaken around GBP330 million of disposals and our teams working on these transactions deserve to be commended for markedly reducing our exposure to the retail sector. This major transaction also further reinforces our balance sheet by bringing our leverage down significantly whilst extending our cash position. Having now achieved a number of our strategic priorities, the Company is in a strong position.”