Redefine sells German retail property portfolio – Redefine International has announced the sale of the Leopard (German supermarket) portfolio to PATRIZIA Immobilien AG. Completion is anticipated to take place in December 2017.
The consideration will reflect a purchase price of EUR205.0 million, reflecting a 10.8% (EUR20 million) premium to the 31 August 2017 book value. They say that this opportunistic disposal capitalises on an exceptionally strong investment market and an approximate 11% increase in the value of the euro relative to sterling over the investment period.
The Leopard Portfolio comprises 66 German retail properties including a mixture of stand-alone supermarkets, foodstore anchored retail parks and cash & carry stores totalling over 138,000 square metres of lettable area. Due to the granularity of the portfolio, its disposal will see the Redefine’s average lot sizes increase significantly, whilst the portfolio will show an increased weighting to locations and sectors where it expects to benefit from higher rates of growth to support our medium-term target of between 2% and 5% rental income growth.
The disposal will include the repayment of EUR86.1 million of debt facilities, with a weighted average cost of debt of 1.4%. The portfolio’s annualised net rental income of EUR12.7 million reflects a net initial yield of 5.8% on the sales price and an approximate 8.3% yield on equity.
The consideration is payable in cash and Redefine intends to recycle the disposal proceeds into new investments which are in line with its stated strategy of enhancing the quality of the portfolio and its growth prospects. It intends to reinvest at lower leverage than the last reported LTV of 50%. A number of investment opportunities have already been identified which are at various stages of due diligence. In particular, Redefine is currently in exclusive negotiations to acquire a portfolio of high quality assets which, if acquired, would utilise the majority of the disposal proceeds. The income yield is expected to be commensurate with the yield achieved on the disposal of the Leopard portfolio and will be accretive to shareholder returns over the medium term. However, there can be no guarantee that such acquisition will proceed to completion and a further announcement will be made, as appropriate, in due course.
Mike Watters, CEO of Redefine International commented: “In line with our strategy, we are consistently looking to realise value by recycling capital at attractive prices. We are very pleased to announce this opportunistic disposal which capitalises on an exceptionally strong German investment market, resulting in a 10.8% premium achieved on book value and a 12.0% premium to the price paid for the acquisition of a controlling interest in April 2017. Following the deal, our overall exposure to Germany will decline from 27% to 18% and we anticipate reinvesting the proceeds into the UK, where we are witnessing some particularly attractive investment opportunities. However, we remain committed owners of and investors in properties that demonstrate strong fundamentals, which coupled with an experienced team of local asset managers, ensures Germany remains a strategic market for us.”
RDI : Redefine sells German retail property portfolio