Listed property investor Kennedy Wilson Europe Real Estate has exchanged contracts on a portfolio of 180 mixed-use properties located across the UK from multiple receivers acting on behalf of Aviva Commercial Real Estate Finance for £503 mln (€642 mln).
Listed property investor Kennedy Wilson Europe Real Estate has exchanged contracts on a portfolio of 180 mixed-use properties located across the UK from multiple receivers acting on behalf of Aviva Commercial Real Estate Finance for £503 mln (€642 mln).
The acquisition reflects a net initial yield of 6.9% (gross yield 7.2%) and is expected to complete at the end of January. It will be funded from the company's cash resources and a new £352.3 mln secured loan facility with vendor Aviva.
The loan, reflecting a LTV on the portfolio of 70%, has been split into three-year floating-rate (33%), five-year fixed-rate (20%) and eight-year fixed-rate (47%) tranches at a weighted average margin of 206 bps.
The 325,000 m2 portfolio is 98% occupied with a weighted average unexpired lease term of 9.6 years (11.1 years to expiry) and generates total net rental income of £36.1 mln. The assets are concentrated in England (54% of the value is weighted towards London and the South East) with the remainder (5% of value) located in Scotland and Wales.
The assets are primarily retail (food and convenience), representing 62% of the value of the portfolio, followed by leisure at 14%, industrial at 12%, and office and hotels at 6%, respectively.
Properties include the Travelodge hotel in King's Cross, London, the Waitrose superstore in Saltash, Cornwall and the Asda superstore in Hemel Hempstead. Major tenants include Wincanton, Debenhams, Travelodge, Waitrose and Matalan.
Upon completion of the acquisition, the KWE investment portfolio will have a value of £1.95 bn, with net rental income amounting to £130.1 mln, generating a net initial yield of 6.5% (gross yield 6.7%). The portfolio geographic split will be 72% UK and 28% Ireland with an asset mix of 89% direct real estate and 11% loans.
'The sale of this portfolio was central to concluding our property restructuring strategy for 2014 and we are very pleased that the high quality nature of the assets and income streams were attractive to KWE as an investor,' commented Ewan Tocher, managing director of Aviva UK Life Commercial Mortgage Restructuring.
CBRE advised KWE and JLL advised Aviva.