Regional REIT has bought Squarestone Growth’s 31-property portfolio for £236m.
The multi-let assets will be bought using £83.1m in shares, £76.7m of cash and additional borrowings of £76.2m.
The portfolio comprises 27 office assets providing more than 1.6m sq ft and housing 192 tenants, including Capitol Park in Leeds, valued at £22.2m.
It also features two industrial units with three tenants occupying 120,020 sq ft, a 10,000 sq ft residential building and a Tim Horton’s Drive-Thru restaurant.
Most of the portfolio (78.2%) is in England, with 17.1% in Scotland and the remaining 4.7% in Wales.
The deal represents a net initial yield of 7.8%, and a reversionary yield of 11.0%, with a contracted rent roll of £21.9m per annum. However, there is considerable room for growth as occupancy is currently at 78.4%.
The deal will increase the value of Regional’s portfolio to around £1bn.
Stephen Inglis, chief executive of Regional REIT’s asset manager, London & Scottish PIM, said: “This large and high-quality acquisition encompasses all the criteria which our experienced asset management platform seeks: income growth opportunities coupled with asset management potential for long-term accretive shareholder value.”
Marius Barnett, representative for Squarestone’s members, said: “We are excited to complete this transaction and to partner with Regional REIT in this next chapter. This has been a complex and detailed transaction given the number and geographical spread of the properties. Over the period of the transaction we have established a good working relationship with the Regional REIT team and look forward to a strong long-term alliance going forward.”
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