TIDMEPIC
RNS Number : 1256I
Ediston Property Inv Comp PLC
15 June 2017
15 June 2017
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Disposal and Acquisition
Disposal of Cutlers Gate, Sheffield and Acquisition of Pallion
Retail Park, Sunderland
Ediston Property Investment Company plc (LSE: EPIC) ("the
Company") announces that it has sold its office building at Cutlers
Gate, Sheffield, to UK Commercial Property Trust Limited for
GBP20,165,000, reflecting a net initial yield of 5.00% (31 March
2017 value: GBP19,775,000). The property comprises 61,638 sq. ft.
of modern offices and is let to Capita Business Services Limited,
with a guarantee from Capita plc, until December 2039.
The asset was acquired by the Company in October 2014 as part of
the seed portfolio. During the hold period, the Investment Manager
used its relationship with the tenant to extend the lease term from
11 years to 25 years, improve the rent review provisions to annual
RPI uplifts, and secure the Capita plc guarantee, all of which
improved the value of the asset.
New acquisition - Pallion Retail Park, Sunderland
The Company has simultaneously re-invested the sales proceeds by
acquiring Pallion Retail Park in Sunderland. The Company has
acquired 100% of the units in a Jersey Property Unit Trust (JPUT)
for GBP25,600,000. The sole asset in the JPUT is Pallion Retail
Park, Sunderland. Taking into account the costs of acquisition and
a rental guarantee on one vacant unit the net initial yield to the
Company is 6.74%.
Buying the JPUT reduced the costs associated with the
acquisition to a figure equivalent to approximately 0.2 per cent.
of the Company's net asset value as at 31 March 2017. The JPUT was
acquired from a fund managed by Europa Capital LLP.
Pallion Retail Park, which occupies a prominent position to the
North West of the city centre, extends to 131,349 sq. ft., across
nine units. The immediate area is undergoing significant
infrastructure change with the construction of the New Wear Bridge
and the Sunderland Strategic Transport Corridor, both of which will
benefit the asset.
The park has an open A1 (part food) planning consent, is let to
tenants including B&M, Dunelm, Matalan, Iceland and
Poundstretcher, and has a weighted average unexpired lease term
(WAULT) in excess of eight years.
The asset, which is reversionary, offers a number of asset
management opportunities including lease regears, lettings, and the
potential to build a Costa Coffee 'drive-thru'. These initiatives
will enhance the tenant line-up, improve the already robust income
stream and offers the potential for capital growth.
Funding
Pallion Retail Park was purchased with a combination of the
proceeds received from the sale of the Company's office property in
Sheffield, a GBP4.5 million addition to the debt facilities
provided by Aviva Commercial Finance Limited, which will be drawn
shortly, and existing cash resources. The all-in interest rate on
the additional borrowings, once drawn, is expected to be fixed at a
rate below the Company's current cost of borrowings. Following the
completion of this acquisition, and the drawdown of the additional
debt, the Company's loan-to-value ratio will be 29.9%.
Impact of transaction
These transactions fit the Company's objective of selling mature
assets out of the portfolio and re-investing the proceeds in assets
with growth potential, which can be unlocked by the Investment
Manager's entrepreneurial and intensive style of asset
management.
The transaction is therefore expected to be return enhancing in
the medium term. Furthermore, by arranging the two transactions
simultaneously the Company has avoided any negative impact of cash
drag on the sale proceeds of Sheffield.
The transaction is also accretive to the income position of the
Company. As a net result of both transactions, the contracted
rental income of the Company has increased by 4.5%, equivalent to
c. GBP0.6 million per annum. The Company now owns assets with a
book value of GBP190.5 million (31 March 2017, GBP184.7
million).
Calum Bruce, Director of Investment at Ediston Properties
Limited, the Company's Investment Manager, said: "Sheffield is a
good example of the Ediston style of asset management; unlocking
value from a 'dry' asset through a proper understanding of the
tenant's needs, creating a robust and attractive income stream and
selling on to the institutional market.
We are pleased to have quickly recycled the capital back into an
'Ediston style' asset which provides attractive asset management
angles to exploit. This asset is well suited to our intensive
approach to management, and allows us to recommence the value add
process with a new property."
For further information:
Ediston Properties Limited (Investment Manager) 0131 225 5599
Calum Bruce
Canaccord Genuity Limited 020 7523 8000
Will Barnett
Neil Brierley
Dominic Waters
David Yovichic
Lansons
David Masters 07825 427 514
Laura Cronin 0207 294 3607
R&H Fund Services Limited (Company Secretary) 0131 550 3763
Donald Cameron
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via Regulatory Information Service
this inside information is now considered to be in the public
domain.
Notes to editors:
Ediston Property Investment Company plc is a UK real estate
investment trust (REIT) with a premium listing on the Main Market
of the London Stock Exchange. The Company invests in UK commercial
real estate assets to achieve its objective of providing its
shareholders with an attractive level of income together with the
potential for capital and income growth. It invests principally in
three commercial property sectors: office, retail (including retail
warehouses) and industrial, without regard to a traditional
property market relative return benchmark. The Company launched in
October 2014 with the acquisition of an initial GBP76.7m
diversified portfolio of UK commercial properties. In July 2015 it
raised GBP35.9 million by way of a placing and offer of ordinary
shares as part of a placing programme. As at 31 March 2017, it
owned 13 properties with an aggregate value of GBP184.70
million.
Portfolio management services are undertaken by Ediston
Properties Limited, which currently manages property assets across
the UK for institutional investors.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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