Leasinvest Real Estate (Leasinvest) has acquired the entirety of the shares of T&T Royal Depot SA (TTRD) from Extensa Group SA, owner of the emblematic building called 'Royal Depot', on the basis of a long-term lease initially granted by the Port of Brussels.
The Royal Depot was built between 1904 and 1906 based on a design by architect Ernest Van Humbeek. It was inaugurated in 1910 by King Leopold II and was used for the long-term storage of goods under government supervisions. The Royal Depot was renovated into a multifunctional and multi-tenant building on 4 floors and commercial activities and horeca on the ground floor in 2000.
Ever since its renovation, the Royal Depot has been fully occupied and the average rent per square metre has gradually increased over this period. The Royal Depot is a niche building and an 'experience hub' for the entire Tour & Taxis site. The central location and the combination of an historic building with facilities and the event-like character of the Tour & Taxis site make the Royal Depot a unique investment object.
Jean-Louis Appelmans, CEO of Leasinvest Real Estate: "The take-over of this iconic building is a unique opportunity for Leasinvest to acquire a real sustainable building that fits entirely within our strategy of expanding its real estate portfolio with well-located retail and office buildings. The acquisition of this historic building that comprises approximately 44,000m² of offices, commercial spaces and archives, is the central pivot of the further to be developed Tour & Taxis site, due to its unique architecture and location. The €6.1m of annual rental income, spread over some 50 tenants, will therefore have a positive impact on the general profitability of Leasinvest as from 2016."
This acquisition represents a fair value of €108m, increasing the total fair value of the direct real estate portfolio of Leasinvest (excluding indirect real estate assets) to over €865m by end 2015, spread over 42.5% retail, 41.7% offices and 15.8% logistics, located for 54% in the Grand Duchy of Luxembourg, 41% in Belgium and 5% in Switzerland. With the indirect real estate portfolio (mainly the stake in Retail Estates), the global direct and indirect real estate portfolio will amount to €933m.
This investment represents an initial yield of 5.61%, in line with market standards. The Royal Depot has an occupancy rate of 95.83% with a diversified rental risk profile of some 50 tenants, including law firms and media companies. The average duration of the rental contracts stands at 3.09 years. The building consists of a total of 44,603m², spread over offices, commercial spaces and archives.
The funding of this acquisition will entirely be secured by the use of undrawn available credit lines. The debt ratio will therefore temporarily increase to just above 58%, till after the planned divestment of the office project Royal20 in the Grand Duchy of Luxembourg, sold for future sale, immediately after its reception foreseen by mid-2016, decreasing the debt ratio again below 55%, or in line with the level withheld by the board of directors of the statutory manager.
The acquisition will contribute significantly to the profitability of Leasinvest and will more than compensate the expected decrease in rental income - due to the vacancy of the buildings Square de Meeûs (vacant since mid-2015) and Montoyer 63 (vacant as of July 2016), that will be entirely rebuilt as sustainable and well-performing new buildings.
