The Board of Raven Russia has announced that a subsidiary of the company has entered into an agreement for the acquisition of a logistics park in Moscow.
The agreement provides for the subsidiary of the company to acquire a completed warehouse complex from Industrial park “Sever”. Initial consideration of €74.58m ($86.58m) is payable with a further deferred element of consideration due within 18 months of completion, dependent on letting of vacant space. The amount of deferred consideration is estimated to be between €21.96m ($25.50m) and €28.67m ($33.29m). Consideration is satisfied in cash.
The yield on the maximum consideration payable is expected to be 11.38% with a reversionary yield of 12.51%.
The purchase price represents a capital value of approximately €525.25 per m² ($600 per m²) which is at or below replacement cost.
The agreement is conditional on the satisfaction of certain escrow arrangements and the acquisition is expected to complete in early December.
The property comprises a Grade A warehouse complex of 195,132m² situated to the north of Moscow approximately 2km from the new Moscow to Saint-Petersburg toll road. The property was built between 2014 and 2017 and is 73% let to a number of local and international tenants, including OBI, O’KEY retail group, Major Logistics, Miratorg and R-Pharm. Leases are Rouble denominated and current annualised income is €8.9m ($10.42m) rising to€12.9m ($14.99m) on a fully let, ERV basis. The current unexpired weighted average lease term is 4 years.
Glyn Hirsch, Chief Executive of Raven Russia said: “We are pleased to announce our second acquisition of the year at a point which is increasingly feeling like the bottom of the cycle. ERV yields of 12+% and capital values at or below replacement cost represent excellent investment opportunities. In sterling, rents are now €5.18 (£4.60) per ft² and capital values €48.4 (£43) per ft². We have commenced discussions on investment debt finance on this deal which should result in a high return on the equity we ultimately invest. The Russian central bank’s further cut in rates last week to 8.25% should also help sentiment. Hopefully we will have more of the same (or better) to come.”