PRETORIA - Listed property company RDI, which was previously named Redefine International, has acquired an 80 percent interest in a portfolio of four high quality flexible offices in central London valued at £161.7 million.
The company said yesterday (mon) the acquisition included existing debt facilities of £73.5m.
It said the equity consideration for RDI’s 80 percent interest in the portfolio of £72.5m, including transaction costs of less than 1 percent, was a timely and efficient reinvestment of the majority of the proceeds of its recent disposal of its German supermarket portfolio.
RDI reported earlier this month that it had completed the sale of its German retail portfolio for €205 million, which was a 10.8 percent premium to book value, and intended to reinvest the disposal proceeds into new investments at lower leverage in line with its stated strategy of enhancing the quality of the portfolio and its growth prospects.
Mike Watters, the chief executive of RDI, said at the time that while Germany remained a strategically important market for RDI, this opportunistic disposal not only allows the company to benefit from a highly attractive premium but also to further reduce leverage and recycle proceeds into identified income enhancing investment opportunities.
RDI said yesterday (mon) the acquisition of the central London portfolio supported the company’s strategy of recycling capital into assets and locations benefitting from sustainable long term growth opportunities, structural change in occupational demand and strategic infrastructure investment.
It said OSIT, the company’s new strategic partner, would continue as the operator and retain a 20 percent interest in the portfolio.
Watters said the acquired portfolio was currently financed at 45 percent of loan to value, which was in line with their strategy to reduce group leverage and at the lower end of their medium term target of between 45 percent and 50 percent.
“We are very pleased to have secured this opportunity to efficiently recycle the majority of the proceeds from the recent disposal of German retail assets into four high quality flexible London offices while maintaining our high quality income profile.
“The long-term market outlook for the flexible office sector remains extremely positive, with structural and behavioural change driving the momentum behind strong occupier demand. Our detailed analysis of the market suggests that this sector is resilient and well positioned to withstand any market uncertainty,” he said.
Watters added that one of the many benefits of RDI’s diversified portfolio strategy was that it provided the company with the ability and agility to invest across sectors where it saw the best growth prospects.
“Given our experience with our hotel portfolio, we are confident in investing in operational real estate, as well as collaborating and aligning interests with high quality operational partners.
“This earnings accretive acquisition enhances our exposure to areas of long term economic growth and supports our strategic priority of buying and owning assets with strong property fundamentals in order to continue delivering superior, sustainable and growing income returns,” he said.
Watters said RDI’s medium term target of delivering between 3.0 percent and 5.0 percent growth in underlying earnings a share remained intact.