22 Dec 2017 07:00
| 22 December 2017 |
LXB RETAIL PROPERTIES PLC
(the "Company" or the "Group")
Disposal of investments at Stafford and further lettings at Rushden Lakes and Sutton
LXB Retail Properties Plc, the Jersey resident closed-ended real estate investment company focused on edge of town and out of town retail assets, is pleased to report that it has exchanged contracts for the disposal of its two remaining investments at Stafford and to update on further lettings at Rushden Lakes and Sutton.
On 21 December 2017, the Group exchanged contracts for the sale of its retail investment at Riverside, Stafford to Pavilion Property Trustees Limited and Pavilion Trustees Limited in their capacity as Joint Trustees of the Gelos Property Unit Trust, managed by Legal & General. The property is let to 13 retailers: M&S, Primark, New Look, River Island, Outfit, Zizzi, JD Sports, Greggs, Vision Express, H&M, Costa, Acapella and Save our Soles. The sale is conditional on the provision of warranties and completion is expected to occur on or about 23 January 2018 when cash proceeds of £35.9m will be received. This reflects a headline price of £36.8m, net of deductions for letting packages in relation to three vacant units and unexpired rent free periods in relation to two units. Completion of the disposal will release cash of £10.2m after repayment of the £25.7m of bank borrowings which are secured on the investment. Details of the Board's proposals for use of the net proceeds will follow when the transaction has completed.
The sale price reflects a net yield of 6.5% for the Group's freehold interest.
On the same date the Group exchanged contracts for the forward sale of the leisure investment at Bridge Street, Stafford to Legal & General Leisure Fund Trustee Limited and Legal & General Property Partners (Leisure) Limited. This development will comprise approximately 53,600 sq ft and will be anchored by a six screen Odeon cinema with seven restaurant units, two of which are open and let to Nando's and Frankie & Benny's. The building construction is scheduled for completion in the summer/early autumn of 2018. The initial purchase price will be paid on completion of the lease to Odeon and will be based on lettings in place at that time on agreed yields and letting criteria. Further payments will be made as and when future lettings are completed. Assuming no further lettings are completed prior to completion of the lease to Odeon, this will give an estimated initial purchase price of £8.9m, subject to the deduction of rent concessions, outstanding rent free periods and outstanding capital contributions. The construction is supported by a £6.4m development finance facility with RBS which will be approximately £4.6m drawn when the sale completes. Hence, the Group anticipates generating an initial cash receipt of approximately £4.3m at completion subject to the deductions noted above. The Group estimates that letting the remaining 5 units could result in subsequent payments totalling up to approximately £4.8m though it should be noted that this estimate is subject to the usual variables.
The agreement reflects a net yield of 5.25% for the cinema and 6% on the restaurant units.
The Group can also report news of further lettings at Rushden Lakes. The letting to Robert Goddard, which was reported as being in solicitors' hands in the last update on 5 December 2017, has now exchanged, subject to planning for a widening of the use to allow further fashion and footwear sales to Terrace A. Robert Goddard will amalgamate the unit with its existing store to provide an enhanced offer, following positive sales in recent months. This letting means Phase 1 is now 100% let.
On Phase 3 at Rushden, contracts have also been exchanged with Decathlon to take a 14,000 sq ft store (7,000 sq ft at ground and 7,000 sq ft at mezzanine level). The letting means a single unit of 6,000 sq ft (which could be split) remains to be let on Phase 3. Practical Completion of Phase 3 is due for June 2018.
At Sutton, contracts have been exchanged with The Gym Group to take a unit of 12,206 sq ft, subject to a change of use to allow for gym use. Once complete, a final unit of 1,313 sq ft remains to be let. Terms have been agreed with a retailer for this final unit.
Commenting on these developments, Tim Walton, CEO of LXB Adviser LLP, said:-
'The Group continues to make good progress with its remaining investments. The sale of Riverside and Bridge Street at Stafford represents a further significant step in effecting an orderly disposal of the Group's remaining assets and once the sale of the Leisure element is completed, concludes the Group's activities in Stafford. The lettings progress at Rushden and Sutton bring us closer to realising the value in these investments.'
For further information please contact:
LXB Adviser LLP Tel: 020 7432 7900
Tim Walton, CEOBrendan O'Grady, FD
J.P. Morgan Cazenove (NOMAD) Tel: 020 7742 4000
Bronson Albery/Paul Hewlett
Buchanan Tel: 020 7466 5000
Charles Ryland/Victoria Hayns/Patrick Hanrahan