Secure Income REIT Plc sells Madame Tussauds freehold investment for €469.3 mln (UK)

The Board of Secure Income REIT announces that it has exchanged contracts for the sale of the Madame Tussauds property investment to the Fubon Life Insurance Company Ltd, the Taiwanese Insurance company, for a cash consideration of £332.5 mln (approx. €469.3 mln). Completion of the sale of this iconic freehold property on Marylebone Road in Central London is expected in the third quarter of 2015.
The property is let on a full repairing and insuring lease to Merlin Attractions Operations Ltd, the owner and operator of Madame Tussauds, guaranteed by Merlin Entertainments PLC, the world’s second biggest visitor attraction business with a market capitalization of circa £4.7 bln (approx. €6.6 bln).
The lease runs for a minimum of a further 27 years with the option for the tenant to extend by up to a further 70 years upon expiry, bringing the potential tenancy length to almost 100 years from today.  The current rent payable on the property is £15.7 mln (approx. €22.2 mln) per annum and the lease provides for uncapped, upward only annual rent reviews throughout the term geared to RPI.
The contract price represents an 8% premium to the valuation of the property as at 31 December 2014 of £309.3 mln (approx. €436.7 mln) and will be partly applied to debt repayments with the balance held for general corporate purposes.
Madame Tussauds has occupied the current site for more than 130 years and has consistently been one of London’s most successful tourist attractions. This is the first time ever that this property investment has been sold individually in the open market.
Commenting on the transaction, Secure Income REIT PLC Chairman, Martin Moore said:  "While we have a strong tie to this internationally iconic building, from a management perspective, we realize that having such a large single property exposure unbalances the spread of assets in our portfolio.  We are pleased to be selling at a satisfactory premium to the most recent valuation, which is less than five months old.
Source: FTI Consulting