Secure Income REIT has exchanged contracts for the acquisition of two substantial off-market portfolios at a total cost of €489.5m (£436m).
The first portfolio compromises leisure assets across the UK with a gross cost of €251.5m (£224m) representing a net initial yield of 5.9% and with a weighted average unexpired lease term of 18.0 years. The properties include Manchester Arena, The Brewery at Chiswell Street, London EC1, a portfolio of 17 hotels let to Travelodge Hotels Limited, and a portfolio of 18 freehold high street pubs let to or guaranteed by Stonegate Pub Company Limited.
The second portfolio features 59 hotels across the UK let to Travelodge at a gross cost of €238m (£212) representing a net initial yield of 6.1% and with a weighted average unexpired lease term of 23.5 years.
Both acquisitions meet the Company's strict investment criteria established at its IPO in June 2014 and will be significantly dividend accretive, will materially deleverage the Group's balance sheet and will reduce the Group's weighted average cost of debt, while also maintaining the Group's very long weighted average unexpired lease term. The acquisitions have the secure long-term inflation-protected income that is at the core of the Company's business, and they also present a number of value enhancing opportunities through asset management.
To part finance the acquisitions, the Company is also proposing to issue up to 86.4 million new Ordinary Shares in the Company targeting gross proceeds of up to €354.2m (£315.5m). The Placing Price will be 365 pence per Placing Share, equal to the 31 December 2017 EPRA NAV per share adjusted for the completion of the transaction. The balance of the consideration for the Acquisitions will be funded by two new non-recourse debt facilities expected to total €144.5m (£128.7m) (approximately 30% Loan to Cost) for which the Group has obtained credit approved terms.
