Last checked at 30 Jul 2014 07:01
30 July 2014
SEGRO ACQUIRES 50 PER CENT INTEREST IN LOGISTICS PROPERTY PARTNERSHIP JOINT VENTURE FROM MOORFIELD REAL ESTATE FUND II
SEGRO plc ('SEGRO' or 'the Group') today announces that it has acquired the 50 per cent interest in its Logistics Property Partnership joint venture ('LPP') previously owned by Moorfield Real Estate Fund II ('MREF II') for £95.6 million.
LPP was established in January 2012 by SEGRO and MREF II as a 50-50 joint venture to acquire the UK Logistics Fund ('the Portfolio') and was jointly managed by SEGRO and Moorfield Group.
Modern warehouses in established UK logistics markets
The Portfolio comprises 12 high quality logistics warehouses totalling 377,000 sq m, predominantly located in the South East and Midlands, and occupiers include major retailers and logistics providers including Sainsbury's, Tesco, Booker, Royal Mail and DHL.
The Portfolio is fully let and has an average lease length of 8.6 years to the earliest of break or expiry.
The Portfolio currently generates annualised net rent of £19.1 million, with a further £4.3 million payable after expiry of rent-free periods.
Based on the purchase price of the 50 per cent stake, the gross value of the properties amounts to £349.8 million and provides a net initial yield of 5.4 per cent and a topped-up net initial yield of 6.6 per cent. The purchase price is in line with the valuation at 30 June 2014.
Acquisition funded from existing resources
LPP is currently funded with a £186.6 million term loan. After adjusting for cash held within the joint venture and other debtors and creditors, SEGRO will pay Moorfield Group a cash consideration of £95.6 million for its 50 per cent interest which will be funded from the Group's existing resources.
Benefits of the transaction
· In line with SEGRO's strategy: The acquisition is aligned with SEGRO's strategy of expanding its presence in its target logistics markets and of reducing the number of smaller joint ventures in the Group.
· SEGRO already manages the assets: SEGRO is very familiar with the assets through its current asset management role and will not incur any incremental management costs through attaining full ownership.
· Improved capital efficiency: This transaction will allow SEGRO to pre-pay the joint venture's current secured lending arrangement by deploying cash on the Group's balance sheet and drawing on existing unsecured committed bank facilities at a significantly lower margin: the margin on SEGRO's facilities are 125bp compared to 250bp on the debt within LPP.
Commenting on the acquisition, SEGRO's Chief Executive Officer, David Sleath, said:
"This transaction provides us with a rare opportunity to acquire, off-market, a portfolio of high quality UK logistics assets with a strong customer line-up. We know the assets well, having successfully executed a number of asset management initiatives within the joint venture, including letting up all the space which was vacant at the time of acquisition. With occupier demand for logistics in the UK improving and supply conditions remaining tight, there are opportunities to realise further value from this attractive portfolio."
ENDS
For further information, please contact:
SEGRO plc
Justin Read (Group Finance Director) Tel: +44 (0) 20 7451 9110
Harry Stokes (Head of Investor Relations and Research) Tel: +44 (0) 20 7451 9124
FTI Consulting
Stephanie Highett / Nick Taylor / Giles Barrie Tel: +44 (0) 20 3727 1000
About SEGRO:
SEGRO is a leading owner, asset manager and developer of modern warehousing and light industrial properties, with £4.5 billion of assets (at 30 June 2014, including joint ventures at share) principally concentrated in London's Western Corridor (including the Thames Valley) and in key conurbations in France, Germany and Poland. It also develops and owns warehouses in important distribution markets in the UK, Belgium, the Netherlands and the Czech Republic, and offices in Slough and Milan. The Group serves around 1,250 customers spread across a diverse range of industry sectors. It has 5.8 million square metres of built space under management and a gross passing rent roll of £266 million (SEGRO share).
For further information see www.SEGRO.com/investors.