Redefine International has announced that it has reached a conditional agreement with the Aegon UK Property Fund to acquire the AUK Portfolio through its wholly-owned subsidiary, Redefine AUK, for an aggregate consideration of £437.2m (£455.7m after costs). This acquisition is conditional upon shareholder approval, for which an EGM will be convened on 25 September 2015. The Company also announces today that, separate to this transaction, it has exchanged contracts unconditionally with the Seller, to acquire Banbury Cross Retail Park for a consideration of £52.5m (£54.7m including transaction costs), which completes today.
The AUK Portfolio comprises 19 properties valued at £439.9m. Of these, six assets are single let, with the balance being multi-let. The portfolio comprises largely institutional quality assets which they believe have strong property fundamentals and scope for adding capital value through active asset management. The net initial yield is 5.0% and the topped up net initial yield (post expiry of rent free periods) is 5.4%, both assuming standard purchaser’s costs of 5.8%.
The topped up net initial yield excluding the Grosvenor Street property and reflecting actual purchaser’s costs is anticipated to be over 5.8%.
The portfolio generates an annual passing rent of £253.5m, increasing to £25.3m after the expiry of rent free periods) and with an estimated rental value of £27.8m. By gross income, 45.2% of the portfolio is comprised of retail properties (principally retail parks), 26.7% offices and 28.1% industrial.
The weighted average unexpired lease term is 7.6 years to the first break option and 9.7 years to expiry. They reckon that, although the portfolio has a high overall occupancy of 96.7% by area, there are numerous identified asset management opportunities to reduce voids and associated carrying costs, which will drive both higher income returns and capital values
The Banbury Cross Retail Park (pictured) is an open A1 retail warehouse park which generates an annual passing rent of £3.1m, rising to £3.5m once existing rent free periods come to an end
RDI : Redefine International in half a billion pound deal