29 Jan 2015 07:00
REDEFINE INTERNATIONAL P.L.C.
("Redefine International" or the "Company")
(Registered number 010534V)
LSE share code: RDI
JSE share code: RPL
ISIN: IM00B8BV8G91
ACQUISITION OF €157 MILLION GERMAN RETAIL PORTFOLIO
Redefine International, the FTSE 250 income focused UK-REIT, announces that it has completed the acquisition of a portfolio of 56 German retail properties (the "Portfolio") in a 50/50 joint venture (the "Joint Venture") with Redefine Properties Ltd ("Redefine Properties"), the Company's largest shareholder.
The Portfolio is valued at €156.8m reflecting a net initial yield of 7.5%. The Portfolio will be acquired together with existing bank debt of €100.0m (the "Transaction"), which the Joint Venture intends to refinance immediately after the Transaction closes. Subject to re-financing, it is expected to produce an initial yield on equity in excess of 11.0%
The Transaction substantially expands Redefine International's portfolio of assets in Germany to approximately £357.8 million, representing 35% of the Company's total core portfolio by value (August 2014: £258.4 million or 28%).
The acquisition is in line with Redefine International's stated strategy to focus on income yielding assets in the retail, commercial and hotel sectors in the UK and Germany to generate sustainable and growing income returns to shareholders.
The Portfolio
The Portfolio's 56 properties total over 128,000 sqm of lettable area and comprise a mix of stand-alone supermarkets, foodstore anchored retail parks and cash and carry stores. The properties are well located within their respective micro markets, with 85% of the total annual rental income located in western Germany and Berlin and the remainder in eastern Germany. Key portfolio attributes include:
· Gross rental income of €12.6m with a WAULT of 10.3 years
· Portfolio occupancy of 99.2% by area
· 100% of gross rental income is subject to indexation of between 65% - 75% of German CPI
· Edeka, Netto, Rossmann and Real account for over 90% of gross rental income providing strong tenant covenants
The Portfolio provides exposure to high quality, secure, indexed-linked cashflows with opportunities to extend existing stores and re-gear leases.
As part of the Transaction, Redefine International will manage the Portfolio in return for a management fee of 0.375% of Redefine Properties' share of the Portfolio's gross asset value. The Transaction is Redefine Properties' first direct investment in Europe and allows Redefine Properties to benefit from Redefine International's experienced European asset management team. The equity invested by Redefine Properties reduces the overall investment risk.
Consideration and Financing
The net consideration of approximately €57.4 million, including the acquisition costs and net working capital, will be funded equally by Redefine International and Redefine Properties from existing cash resources.
As part of the Transaction, the Joint Venture will assume the existing bank debt facilities totalling €100.0 million. The existing bank loans have a weighted average maturity of 5.7 years and a weighted average interest cost of 4.44% per annum.
As stated, it is the intention of the Joint Venture to refinance the existing bank facilities at current market rates with a new single facility as soon as possible. The Transaction is expected to produce an initial yield on equity in excess of 11.0% following the proposed refinancing. The portfolio is expected to be refinanced at approximately 50% loan to value, with an all in cost of debt of 1.80%.
As Redefine Properties is a related party of the Company under the Listing Rules by virtue of its 30.03% shareholding in the Company, the Transaction falls within Listing Rule 11.1.10 R.
Mike Watters, CEO of Redefine International, commented:
"The acquisition of this portfolio in one of our core markets in conjunction with our major shareholder is a considerable achievement, in a market which is highly competitive for quality income producing assets such as these. The portfolio is well let, has been well managed, and offers considerable scope for asset management activity. The transaction is expected to be earnings accretive in this financial year."
For further information:
Redefine International P.L.C. | |
Michael Watters, Stephen Oakenfull | Tel: +44 (0) 20 7811 0100 |
FTI Consulting UK Public Relations Adviser | |
Dido Laurimore, Claire Turvey, Ellie Sweeney
FTI Consulting SA Public Relations Adviser Max Gebhardt | Tel: +44 (0) 20 3727 1000
Tel: + 27 (0) 11 214 2402 |
JSE Sponsor Java Capital | Tel: + 27 (0) 11 283 0042 |
Notes to editors:
Redefine International (RDI) is a FTSE 250 income focused UK-REIT with a primary listing on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange.
The Group invests in large, well developed economies with established and transparent real estate markets. Within these markets, Redefine International's £1 billion investment portfolio provides diversified exposure to the commercial, industrial, retail and hotel sectors.
Redefine International is focused on delivering sustainable and growing income to shareholders through investment in income yielding assets let to high quality occupiers on long leases. Capital values are enhanced and protected by asset management and other low capex development activities.
As a UK-REIT, the Group aims to distribute of the majority of its earnings available for distribution on a semi-annual basis, providing investors with attractive income returns as well as exposure to capital growth opportunities.
www.redefineinternational.com