Real Estate Investors buys West Bromwich block

9th Mar 2016 16:02

(ShareCast News) - Real Estate Investors was looking at the possibility of a combined West Bromwich development on Wednesday, announcing its intention to purchase the freehold of West Plaza on the high street from Bond Wolfe Estates for £8m.The AIM-traded real estate investment trust said the deal would be funded by cash from its existing resources and facilities. The property was valued at £8.1m by GBR Phoenix Beard on 5 February, it confirmed.West Plaza was described as an 11 storey, 87,929 square foot building close to junction one of the M5 motorway. It adjoined Metro Court, a 26,000 square foot office building already acquired by REI in December 2008.The building's current contracted annual rent was £656,050, and the independent estimated rental value was £712,918, though REI said its internal estimate was higher.West Plaza's largest single tenant was Premier Inn, which had an 85-room hotel occupying six floors, at a current annual rent pf £310,000. That rent was due for review in April, though it didn't expire until April 2031 with a break in 2021.The eighth floor was let to Bond Wolfe, a partnership in which REI's chief executive Paul Bassi was the principal equity holder, at an annual rent of £112,500."The acquisition is expected to enhance REI's net income and the company believes there is potential, in the longer term, for residential development of the property," REI's board said in a statement."[We] also believe there may be additional marriage value from combining the property with Metro Court, the adjoining property," it added.Additionally, Bassi - who held a 65% shareholding in Bond Wolfe, was informed by other shareholders in that company that they wished to realise their investment in West Plaza.He said he intended to re-invest his part of the net proceeds into REI in the market, which would add to the 375,000 shares he purchased in December 2015. REI's other directors said they consider the terms fair and reasonable.Due to Bassi's shareholding in Bond Wolfe, the acquisition still required approval by REI shareholders at a general meeting.