SEGRO plc announces that it has today exchanged contracts for the sale of Pegasus Park in Brussels to funds managed by Ares Management LP for €83.4 million.
The sale proceeds are in line with the 31 December 2013 book value2, and represent a yield to SEGRO of 9.0%. This takes into account the €0.9 million annualised running costs of SEGRO's office at Pegasus Park which will be closed as a result of this transaction.
Pegasus Park comprises a 81,500 m² office park, 90% of which was developed between 1999 and 2003, and 7 hectares of development land adjacent to Brussels Airport. The asset generates annualised net rental income of €8.7 million with a current vacancy rate (based upon 31 December 2013 ERV) of approximately 20% and a weighted average lease length to earlier of break or expiry of 3.5 years. The asset is the fifth of the six large, non-strategic assets identified for disposal as part of SEGRO's strategic review in November 2011 to be sold.
Completion of the transaction is expected in the third quarter of 2014. Following the disposal, SEGRO will continue to own and manage assets in Belgium, principally two core logistics assets held in the SEGRO European Logistics Partnership joint venture.
Commenting on the disposal, Phil Redding, SEGRO's Chief Investment Officer, said: "The disposal of Pegasus Park is a further important milestone in the strategic reshaping of our portfolio, reducing our exposure to regional office parks and providing funds to strengthen our balance sheet and build critical mass in our core products.
"In the year to date, we have invested over £200 million (approx. €252 million) in logistics assets in Germany, France, Poland and the UK at an average yield of 7.3 per cent, increasing our focus on more modern, less management-intensive logistics warehouses to drive sustainable, long-term total property returns."