RDI recently announced the disposal of the Schloss Strassen Center in Berlin. Photo: Robin Ball
RDI recently announced the disposal of the Schloss Strassen Center in Berlin. Photo: Robin Ball

Asset disposal announcement boosts RDI shares

By Edward West Time of article published Sep 8, 2020

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CAPE TOWN - THE SHARE price of RDI, the income-focused UK real estate investment trust, shot up 6.25 percent to R20.24 on the JSE yesterday after a substantial asset disposal was announced in its efforts to reduce risk and bolster the balance sheet.

The group, which has its main listing in London and a secondary listing on the JSE, said it would sell its UK retail parks portfolio of six assets for £156.9 million (R3.45 billion) to M7 Real Estate Limited, a statement said.

The disposal was anticipated to be complete by mid-October. The purchase price reflects a 3 percent discount to the last reported on February 29 values and a topped-up net initial yield of 7.5 percent.

The portfolio had annual rental income of £12.5m at February 29, a weighted average unexpired lease term of 7.3 years and occupancy of 8.4 percent. RDI is repositioning its portfolio and the disposal reduces its overall retail exposure to 11.8 percent, from 28.4 percent at February 29.

The group also recently announced the disposal of the Schloss Strassen Center in Berlin.

RDI was focusing its attention on growing into the distribution and industrial property sectors and on its hotels and London serviced offices operating platform.

Some €50.5m (R990m) of German retail assets remain to be sold and were at various stages of negotiation.

The portfolio being disposed of comprises Banbury Cross Retail Park, Banbury; St Davids Retail Park, Bangor; Milton Road Retail Park, Edinburgh; Queens Drive Retail Park, Kilmarnock; Priory Retail Park, Merton, London; and The Arches, Watford, London.

The anticipated disposal proceeds of about £156.9m will be used to reduce the revolving credit facility by about £100m, providing a significant reduction in leverage.

Cash and facility headroom were anticipated to increase to about £240m, with about £140m of that held in cash (February 29: £85m).

RDI chief executive Mike Watters said: “We have taken a substantial step forward in the implementation of our portfolio strategy in a very short space of time and against a challenging backdrop. In just 18 months since announcing our strategic review, we have undertaken around £330m of disposals, markedly reducing our exposure to the retail sector.”

BUSINESS REPORT

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