UK Commercial Property Trust, the largest UK-focused commercial property trust, managed by Ignis, announces the purchase of The Rotunda Leisure Scheme in Kingston upon Thames from Curo Property Funds for £50.7 million (approx. 58 million), reflecting an initial yield of 6.47%.
The prime, purpose-built leisure scheme, which extends over 170,000 ft² (approx. 15,800 m²), is fully let with an annual rent roll of £3.3 million from 11 tenants including some of the top operators in the leisure sector such as Odeon (14-screen cinema), Tenpin Bowling, David Lloyd Fitness, Pizza Express and Prezzo, on unexpired lease terms averaging 16 years.
Located in the heart of Kingston upon Thames, which is one of the top three retail destinations in Greater London, The Rotunda is strategically located directly
opposite Kingston train station and next to the town`s main bus interchange, where it benefits from a very high pedestrian footfall with in excess of 2.5 million visitors per annum.
This acquisition has been partially funded by drawing down the remaining £37.9 million available under the existing Lloyds debt facility.
Robert Boag, Senior Investment Director, Ignis, commented: "The Rotunda is UKCPT`s first acquisition in the leisure sector which has proven to be resilient at both an occupational and investment level. The purchase of such a prime leisure scheme in an affluent London suburb, at a compelling income yield and where there is definite potential to build on the rental income through hands on asset management, is consistent with the company's acquisition policy and will further support the attractive dividend yield paid to shareholders."
In further news, UK Commercial Property Trust announces that it has entered into a new £150-million, seven-year term loan facility with Barclays Bank plc (the 'Facility').
The new facility follows the company's announcements of April 4 and 28, 2011 and is in line with its strategy of increasing UKCPT's financial capability, allowing it to act quickly and strategically with regard to acquisitions and portfolio asset management.
Subject to the satisfaction of certain conditions, the Facility shall remain available to be drawn down for a period of 18 months and shall be repayable on May 18, 2018.
The Facility includes terms which are typical for a facility of this nature, including a 60% loan-to-value and an interest cover limit of 1.6 times. The interest rate margin payable under the Facility is 1.85% above LIBOR, which could be reduced to a minimum margin of 1.60%, on the basis of a loan-to-value ratio of less than 25%, and increased to a maximum margin of 2.00% on the basis of a loan-to-value ratio above 45%.
The Facility is secured only over the assets of UK Commercial Property Estates Holdings Limited and UK Commercial Property Estates Limited, both subsidiaries UKCPT.
It is expected that the loan to value in respect of the Facility will be just below 45% once the amounts under this facility are fully drawn. It does, however, remain the Board's intention that the borrowings of the overall group at the time of draw down will not exceed 25% of the total assets of the overall group.
In the event that the full amount of the Facility is drawn down, the total borrowings of the overall group would amount to approximately 22% of the total assets of the overall group, still lower than the average gearing within the Company's peer group.
£15 million of the Barclays Facility has been drawn down in order to partially fund the acquisition of The Rotunda Leisure Scheme.
Christopher Hill, UKCPT's Chairman, commented: "Having recently received shareholder approval at EGM to increase the Company's gearing to 25%, we have quickly taken steps to move this process on to the next logical step. As a result we now have a further £150 million at our disposal, which will be invaluable to the ongoing management of our portfolio, particularly in providing us with the flexibility to pursue acquisitions and other opportunities quickly and efficiently."