The office block was originally acquired as part of the AUK Portfolio in March 2016 and the sale price represents a net initial yield of 3.6% and a 14.3% premium to the last reported book value. The geared IRR over the investment period was 22%.
The property, which has been acquired by Aviva Investors, acting on behalf of Essex County Council, provides 7,776 sqm (83,688 sq ft) of office space and delivers annual net rental income of £1.1 million with a WAULT of 4.1 years.
The proceeds from the sale will be used to fund the refinancing and extension of certain of the Company’s debt facilities. Terms have been agreed to extend the term of certain debt facilities with the Company contributing approximately £25.0m of equity to reduce the loans. The improvement to the terms of the debt facilities will deliver an attractive return on the equity contribution of approximately 10% per annum. Further details on the Company’s plans for the evolution of the capital structure will be provided at the Capital Markets Day on Monday 6 February 2017.
Mike Watters, CEO of Redefine International commented:
"The disposal of 201 Deansgate represents yet another significant value enhancing opportunity that the AUK Portfolio offers the Company. After less than a year of ownership, we have delivered an excellent 14.3% premium to book
value on behalf of our investors, whilst also de-risking the portfolio from a number of upcoming lease breaks due on the property. The proceeds from the disposal will be put towards reducing debt on favourable terms."