Redefine International, the FTSE 250 income focused UK-REIT, is pleased to announce that the company has reached a conditional agreement with Redefine Global Limited to acquire control of the German Leopard Portfolio joint venture, in which it holds an existing 50% equity interest, for an aggregate consideration of €49m.
Following the acquisition, the company will hold an effective 94% controlling interest in the portfolio, whilst providing 100 % of its non-bank financing requirements by way of shareholder loans.
The Leopard Portfolio comprises 66 German retail properties generating gross rental income of €13.9m, of which 99.2%. is indexed to between 60-70% of German CPI subject to indexation reaching a cumulative hurdle of 10%. The portfolio is independently valued at €175.5m reflecting a net initial yield of 7.4%.
The consideration of €49m reflects taking on existing debt facilities totalling €86.1m ( €43.1m being the company's existing share). The facilities have an average all-in cost of 1.4% per annum which supports a 10% geared income return on the total consideration payable by the Group, including transaction costs.
The seller is a wholly-owned subsidiary of Redefine Properties Limited, which is a substantial shareholder of the company. Accordingly, the Acquisition constitutes a related party transaction for the purposes of Chapter 11 of the UK Listing Rules and is therefore conditional on Independent Shareholders' (excluding Redefine Properties and its associates) approval, which will be sought at an Extraordinary General Meeting convened on 25 April 2017.
Mike Watters, CEO of Redefine International commented: “In line with our strategy, this transaction represents a good opportunity to recycle capital into assets which generate a strong income yield, having sold the VBG portfolio of German offices at an 8.6 per cent. premium to book value. Furthermore, our controlling interest in the portfolio will provide more flexibility over future asset management initiatives and reinvestment decisions.”
