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RDI REIT pleased with portfolio performance amid disposals programme
13th Jan 2020 10:58
(Sharecast News) - RDI REIT announced positive letting activity and continued progress on its strategic disposal programme on Monday, reporting that its portfolio occupancy had remained high, with a number of successful lettings in the first quarter of the new financial year.
The London-listed real estate investment trust said that as at 30 November, occupancy across the portfolio, excluding the RBH managed hotels and London serviced offices, stood at 96.9%, up from 95.9% as at 31 August.
Key leasing activity since the end of August included Link 9 in Bicester, where a new 15-year lease was signed with Arrival Automotive for unit 1A, consisting of 120,599 square feet, of the newly-developed distribution warehouse.
The annual rent of £0.98m was subject to review every five years, including capped and collared RPI escalation provisions.
Unit 1B, comprising 168,154 square feet, was completed in December, with RDI saying the unit was being marketed and had attracted "healthy" levels of interest, supported by the limited supply of modern distribution units along the M40 corridor.
At Camino Park in Crawley, the firm said a rent review was agreed with Parcelforce on a 53,214 square foot distribution unit.
The board said the previous annual gross rental income of £0.38m had been increased by 60% to £0.6m.
Looking at its retail parks, RDI said three new lease extensions had been agreed with DSG Retail across the portfolio, totalling 42,558 square feet and an aggregate annual gross rent of £0.96m.
In all cases, the leases were extended to new 10-year terms, with the rent remaining unchanged from the previous passing rent in return for an average rent free period of 15 months.
The new terms reflected an average 1.7% premium to the valuer's 31 August estimated recovery value.
At St George's in Harrow, RDI said the lease with Vue Cinemas - a key anchor tenant at the site - had been extended for a new 20-year term, with the rent remaining unchanged at £0.77m per annum, and subject to review every five years, with capped and collared RPI escalation provisions.
The new lease agreement included a £2m capital contribution to refitting the cinema.
Finally, looking at its RBH-managed hotels and London serviced office portfolios, RDI said the London market for limited service hotels had traded in line with expectations, with revenue per available room (revPAR) said to be "broadly flat" year-on-year.
However, it said certain regional markets, including Edinburgh, had seen occupancy and rates come under pressure.
A similar trend had been experienced across the group's managed hotel portfolio, with London hotels typically experiencing stable trading conditions, and a limited number of regional hotels experiencing tougher market conditions.
Average occupancy for the RBH managed portfolio for the first quarter to 30 November was stable at 86.1%, with revenue per available room marginally lower at £83.90, down from £84.90 as at 31 August.
The London serviced office portfolio continued to perform in line with expectations, with average occupancy as at 30 November remaining high at 90.1%, down from 93.6%, and remaining stable to the end of December.
EBITDA performance for the first quarter of the financial year was in line with expectations.
Looking at its disposals programme, the board said further progress had been achieved following the sale of an office building at Waterside in Leeds, at a "significant" premium to its 31 August market value, while certain disposals previously announced had now completed.
A further £212.8m of disposals, not already sold or exchanged for sale, formed part of the strategic disposals plan, of which the board said £128.1m was under offer and at various stages of negotiation.
The disposals programme remained focused on delivering the strategic priorities of reducing retail exposure to approximately 20% of the portfolio, and strengthening the balance sheet with a revised loan-to-value target of between 30% and 40%.
RDI confirmed that Waterside in Leeds had been sold for £6.5m, reflecting a topped-up net initial yield of 5.8% and a 37.2% premium to the 31 August market value.
The board said the 35,966 square foot office was fully let to the Secretary of State until July 2029, following a lease regear completed in July.
Waterside was described as one of the UK mature assets previously identified for disposal.
At Kaiserslautern and Waldkraiburg, as the board had previously announced, two retail warehouse assets held in joint venture were exchanged for sale on 4 October.
The disposal had now completed for €20.4m, of which RDI's share was €10.6m, which was a 9.1% premium to the 31 August market value.
At the Bahnhof Center in Altona, Hamburg, also as the firm had previously announced, contracts were exchanged for the sale of the asset for €91m, reflecting a 2.5% premium to the 31 August market value.
The disposal was originally anticipated to complete on 31 December, however the City of Hamburg had exercised a statutory right of pre-emption to acquire the asset.
There were ongoing discussions between the original purchaser and the City of Hamburg to determine whether an alternative contractual solution to exercising the pre-emption right could be reached.
Regardless of that, the terms of the original sales contract remained binding whether the asset was acquired by the original purchaser or the City of Hamburg.
RDI said it would continue to benefit from the income returns while the pre-emption position was resolved, and until the disposal was completed.
"Our asset management team has delivered a number of letting successes, reflecting our ongoing focus on maximising the potential of our core portfolio," said RDI REIT chief executive officer Mike Watters.
"Within our non-core portfolio, we are making good progress in disposing of those assets identified for sale in order to reduce leverage and reweight our portfolio."
That, Watters said, would ensure it was more streamlined, structurally resilient and well positioned for the long term.
"Sales in both the UK and Germany have been completed at premiums to the 31 August valuations."
As at 1047 GMT, shares in RDI REIT were up 0.56% at 132.13p.
The London-listed real estate investment trust said that as at 30 November, occupancy across the portfolio, excluding the RBH managed hotels and London serviced offices, stood at 96.9%, up from 95.9% as at 31 August.
Key leasing activity since the end of August included Link 9 in Bicester, where a new 15-year lease was signed with Arrival Automotive for unit 1A, consisting of 120,599 square feet, of the newly-developed distribution warehouse.
The annual rent of £0.98m was subject to review every five years, including capped and collared RPI escalation provisions.
Unit 1B, comprising 168,154 square feet, was completed in December, with RDI saying the unit was being marketed and had attracted "healthy" levels of interest, supported by the limited supply of modern distribution units along the M40 corridor.
At Camino Park in Crawley, the firm said a rent review was agreed with Parcelforce on a 53,214 square foot distribution unit.
The board said the previous annual gross rental income of £0.38m had been increased by 60% to £0.6m.
Looking at its retail parks, RDI said three new lease extensions had been agreed with DSG Retail across the portfolio, totalling 42,558 square feet and an aggregate annual gross rent of £0.96m.
In all cases, the leases were extended to new 10-year terms, with the rent remaining unchanged from the previous passing rent in return for an average rent free period of 15 months.
The new terms reflected an average 1.7% premium to the valuer's 31 August estimated recovery value.
At St George's in Harrow, RDI said the lease with Vue Cinemas - a key anchor tenant at the site - had been extended for a new 20-year term, with the rent remaining unchanged at £0.77m per annum, and subject to review every five years, with capped and collared RPI escalation provisions.
The new lease agreement included a £2m capital contribution to refitting the cinema.
Finally, looking at its RBH-managed hotels and London serviced office portfolios, RDI said the London market for limited service hotels had traded in line with expectations, with revenue per available room (revPAR) said to be "broadly flat" year-on-year.
However, it said certain regional markets, including Edinburgh, had seen occupancy and rates come under pressure.
A similar trend had been experienced across the group's managed hotel portfolio, with London hotels typically experiencing stable trading conditions, and a limited number of regional hotels experiencing tougher market conditions.
Average occupancy for the RBH managed portfolio for the first quarter to 30 November was stable at 86.1%, with revenue per available room marginally lower at £83.90, down from £84.90 as at 31 August.
The London serviced office portfolio continued to perform in line with expectations, with average occupancy as at 30 November remaining high at 90.1%, down from 93.6%, and remaining stable to the end of December.
EBITDA performance for the first quarter of the financial year was in line with expectations.
Looking at its disposals programme, the board said further progress had been achieved following the sale of an office building at Waterside in Leeds, at a "significant" premium to its 31 August market value, while certain disposals previously announced had now completed.
A further £212.8m of disposals, not already sold or exchanged for sale, formed part of the strategic disposals plan, of which the board said £128.1m was under offer and at various stages of negotiation.
The disposals programme remained focused on delivering the strategic priorities of reducing retail exposure to approximately 20% of the portfolio, and strengthening the balance sheet with a revised loan-to-value target of between 30% and 40%.
RDI confirmed that Waterside in Leeds had been sold for £6.5m, reflecting a topped-up net initial yield of 5.8% and a 37.2% premium to the 31 August market value.
The board said the 35,966 square foot office was fully let to the Secretary of State until July 2029, following a lease regear completed in July.
Waterside was described as one of the UK mature assets previously identified for disposal.
At Kaiserslautern and Waldkraiburg, as the board had previously announced, two retail warehouse assets held in joint venture were exchanged for sale on 4 October.
The disposal had now completed for €20.4m, of which RDI's share was €10.6m, which was a 9.1% premium to the 31 August market value.
At the Bahnhof Center in Altona, Hamburg, also as the firm had previously announced, contracts were exchanged for the sale of the asset for €91m, reflecting a 2.5% premium to the 31 August market value.
The disposal was originally anticipated to complete on 31 December, however the City of Hamburg had exercised a statutory right of pre-emption to acquire the asset.
There were ongoing discussions between the original purchaser and the City of Hamburg to determine whether an alternative contractual solution to exercising the pre-emption right could be reached.
Regardless of that, the terms of the original sales contract remained binding whether the asset was acquired by the original purchaser or the City of Hamburg.
RDI said it would continue to benefit from the income returns while the pre-emption position was resolved, and until the disposal was completed.
"Our asset management team has delivered a number of letting successes, reflecting our ongoing focus on maximising the potential of our core portfolio," said RDI REIT chief executive officer Mike Watters.
"Within our non-core portfolio, we are making good progress in disposing of those assets identified for sale in order to reduce leverage and reweight our portfolio."
That, Watters said, would ensure it was more streamlined, structurally resilient and well positioned for the long term.
"Sales in both the UK and Germany have been completed at premiums to the 31 August valuations."
As at 1047 GMT, shares in RDI REIT were up 0.56% at 132.13p.