Grainger plc, announced the acquisition of a tenanted residential property portfolio in London for £160 million (approx. €204.45 million) from Property Investments (Chelsea) Limited. The purchase price is the investment value of the properties as at the date of acquisition and represents a discount to their vacant possession value.
Comprising 61 freehold houses, the Chelsea Houses Portfolio is located across nine streets in Knightsbridge and Chelsea, all within the SW3 postcode. Of the 61 houses, 45 are subject to regulated tenancies, 13 are subject to Assured Shorthold Tenancies (AST’s) and three are vacant.
The unmodernised nature of the majority of the assets provides significant potential for value enhancement over the long term through refurbishment and modernisation of the properties, including the possibility of increasing the saleable floor space.
Andrew Cunningham, Chief Executive of Grainger plc, said: “This is a rare and exciting opportunity. It is a very attractive portfolio in one of the most prestigious locations in London and it includes a high concentration of regulated tenancies, a sector in which Grainger has had a long and successful history of investing. Leveraging this experience and the skills within our unique operating platform to manage and enhance residential property, I am confident that we will generate significant value from the portfolio on behalf of our shareholders over time.”
The primary profit driver for the assets over the long term will be the crystallisation of the capital value upon sale at vacancy, benefiting from the unwinding of the reversionary discount at purchase and any house price inflation over the hold period. This will be enhanced by significant development potential. The portfolio comprises a majority of regulated tenancies and currently generates a gross rent of £1.92 million (approx. €2.32 million) per annum.
The portfolio has been acquired using the Company’s existing financing facilities. On completion of the transaction, Grainger’s available headroom in these existing financing facilities stood at £214 million (approx. €258.9 million). Grainger will announce its Interim Results for the six months ending 31 March 2014 on Friday, 16 May 2014.