Regional REIT has acquired a portfolio of 31 multi-let office assets from Squarestone Growth LLP for a consideration price of £236 million.
Regional REIT said the portfolio comprises 27 office assets providing over 1.6m sq. ft. for 192 tenants; 2 industrial units (120,020 sq. ft.) with 3 tenants; a residential asset with 12 tenants (10,672 sq. ft.); and a Tim Horton’s Drive-Thru restaurant (2,010 sq. ft.) for a single tenant.
The portfolio is located entirely outside of the M25, 78.2% in England; 17.1% in Scotland; and the remaining 4.7% in Wales.
Regional REIT will pay the consideration to the vendor via three components: the issuance of 84,230,000 new ordinary shares in the company at 98.6 pence per share equivalent to £83.1m, £76.7m of existing cash resources and additional borrowings of £76.2m.
· Regional offices (by value) constitute 93.3% of the Portfolio; industrial 4.9%; residential 1.1%; retail 0.7%
· Net initial yield of 7.8%, and a reversionary yield of 11.0%
· Contracted rent roll amounts to £21.9m per annum
· EPRA occupancy (by ERV) of 78.4%
· The highest valued single asset is Capitol Park, Leeds at £22.2m
· The portfolio’s weighted average unexpired lease term to expiry is 4.0 years; WAULT to first break is 2.6 years; office WAULT is 3.9 years and WAULT to first break is 2.4 years
Stephen Inglis, CEO of London & Scottish Property Investment Management, the Asset Manager of Regional REIT commented:
“This large and high-quality acquisition encompasses all the criteria which our experienced asset management platform seeks: income growth opportunities coupled with asset management potential for long-term accretive shareholder value.
Our asset management platform comprises of 62 professionals across a number of disciplines from asset and property management, research, legal, corporate finance to credit control located in Glasgow, Leeds, Manchester and London. They are looking forward to integrating the properties into the current portfolio.
This is a major milestone for the Company, the scale and diversity added to the company’s portfolio through this transaction will be accretive for all shareholders. The sourcing of this major portfolio acquisition is a testament to the strength of our network and central position in the regional office market and further builds upon our strategic objective of being the regional office space provider of choice.
We look forward to welcoming and working with the new shareholders.”
Marius Barnett, representative for the Squarestone LLP members commented:
“We are excited to complete this transaction and to partner with Regional REIT in this next chapter. This has been a complex and detailed transaction given the number and geographical spread of the properties.
Over the period of the transaction we have established a good working relationship with the Regional REIT team and look forward to a strong long term alliance going forward.”