Regional REIT Limited has announced that it has exchanged contracts to buy the “Rainbow Portfolio” for £80m from Northwood Investors.
The portfolio produces a net yield of 8.2% at a capital rate of only £70 per sq.ft., well below replacement cost. The portfolio comprises 12 assets, five offices and seven industrial sites totalling 1.15m sq.ft. and geographically spread throughout the UK in major regional urban areas including Bristol, Manchester, Cardiff, Sheffield and the West Midlands. Tenants include Clerical Medical, Equitable Life, Invensys, Vanguard Logistics, Schenker, Veolia and FMC Technologies.
Approximately 45% of the income is derived from the industrial assets with offices accounting for the remaining 55%. 86% of the income is from assets in England (North East 17%, South West 14%, South East 49%), 8% in Scotland and 6% in Wales.
they say this acquisition further bolsters Regional REIT’s assets and has good rental income, will be earnings enhancing and offers strong capital growth prospects through the implementation of the Company’s intensive asset management initiatives.
The Company has also announced a number of sales:
- Churchill Plaza, Basingstoke sold for £12m, the property having been acquired in August 2014 for £7.5m. The sale price represents a 52% increase on the June 2015 value and a 10% increase on the December 2015 valuation.
- Five retail assets sold for a total consideration of £4.8m, marginally ahead of the December 2015 valuation.
- An office building in Kirkcaldy has also been sold for £0.9m, 50% ahead of the June 2015 valuation and in line with the December 2015 valuation, and an office building in Glasgow sold just before the December 2015 valuation for £1.5m, in line with valuation.
Following completion of the transactions announced today the investment portfolio will amount to approximately £511m (31 December 2015: £405.4m), and the Company expects its net loan-to-value ratio to increase to approximately 41%.
RGL : Regional REIT buys Rainbow portfolio