LXB Retail Properties has given more information about one of the disposals it highlighted in its announcement on 18 December. It is selling land earmarked for residential development and a Sainsbury’s foodstore in Sutton for £47.8m and expects to get the first £23m of this in cash by May 2015.
The Sutton investments comprise a foodstore which is pre-let to Sainsbury’s and two residential blocks which have planning consent for 181 apartments, five town houses and 27,500 sq ft of open A1 retail space in nine units on the ground floor.
The foodstore investment has been sold to The Lime Property Fund which is managed by Aviva Investors. The site remediation works started in December 2014 and the conditionality in the contract is expected to be satisfied by May 2015 at which time initial cash proceeds of £20m will be received. The new owners will fund the foodstore construction which will start as soon as the remediation has been completed. The Group has agreed to oversee the development and will receive a further amount from the purchaser at completion of the foodstore which is scheduled for April 2016.
Contracts have also been exchanged with Linden Homes, the housebuilding arm of Galliford Try Plc, to dispose of the residential element of the scheme for a cash consideration of £12.5m (less a deduction for utilities connections which is not expected to exceed £150k). In addition to the cash receipts, Linden Homes will also fund the construction of the ground floor retail units and grant a 999 year lease on the ground floor retail units back to the Group (at nil premium and a peppercorn rent) when the residential towers are completed. This sale is also expected to complete by May 2015 when the demolition works finish and the planning related conditions have been discharged. Cash of £3.625m will be received on completion with the remainder being received in instalments throughout 2015.
Taking into account the cash proceeds and the value of the 999 year lease on the retail units, the Group estimates the total value of these two disposals to be approximately £47.83m which represents a further uplift to NAV of approximately £4.5m since the September 2014 balance sheet. This additional NAV is expected to be realised in the Group’s results in the next two financial years and mainly in the current year.
The company also announced a number of new lettings and the unfortunate rejection of its panning application for its “Living Village” concept in Truro.
LXB Retail announces substantial disposal