K&C REIT has announced that, on 6 May 2016, it agreed to acquire the entire issued share capital of The Osprey Management Company Limited from Ms Susan Hards for an aggregate consideration of £1.6m. Osprey owns a portfolio of freehold interests in a number of high quality retirement and residential properties in London and southern England. In addition, Osprey provides property management services to the occupants in most of the properties in the freehold portfolio and to other residential and industrial properties. The consideration will be satisfied by a payment of £1.3m in cash and issuance to the vendor of three million K&C ordinary shares credited as fully paid up at 10p per share.
The three core properties in the Osprey portfolio have been independently valued at £2.55m, comprising £1.45m of freehold value and a further £1.1m of leasehold value in the three apartments owned by Osprey and occupied by managers of these properties. The latter will require the creation of new leasehold interests as the apartments are held within the freehold envelope.
Pre-tax profit for the past four years, adjusted for non-recurring past directors’ costs, is 7.2% per annum of the acquisition price and 8.8% per annum of the cash element of the consideration. They say the properties are located in growth areas such as Bromley and Finchley, with sample units independently valued at between £220,000 and £500,000 each. The acquisition is expected to provide material NAV enhancement through buying in leases, the increasing value of reversionary interests and the sales of lease extensions.
Osprey commenced trading in 1985, originally as part of Speyhawk Retirement Homes Ltd, to manage luxury retirement properties. Today, the business includes a portfolio of freehold interests comprising mainly residential apartment blocks, built to a high standard in the 1980s, with a total of 172 units. The majority of the value of the portfolio lies with three ‘core’ properties that are located in and around London. The portfolio includes:
- The core properties, three freehold blocks located in West Hampstead and Bromley, comprise 90 leasehold apartments that carry a stipulation that occupants must be not less than 55 and 60 years of age. Sixty-two of these apartments have leases with less than 70 years to expiry. In addition, Osprey owns a freehold apartment used by the manager in each block
- Two freehold residential developments comprising 13 houses and 35 apartments
- One freehold block of 30 apartments and a freehold apartment used by the manager
All the leasehold properties are on effective full repairing and insuring (FRI) leases.
In four of the owned and managed retirement blocks, Osprey has the exclusive right to earn sales commissions of either 2.5% or 3% from remarketing. Osprey also manages five residential portfolios, comprising 72 flats and 23 houses, and one industrial portfolio of 12 units.
KCR : K&C REIT buys retirement and residential portfolio