European investor and asset manager M7 has acquired a portfolio of retail parks in the UK from London-headquartered REIT, RDI.
The six assets, situated in Banbury, Bangor, Edinburgh, and Kilmarnock plus two in London, were acquired for the M7 Box+ II vehicle for £156.9 mln (€175 mln).
The purchase price reflects a 3.0% discount to the last reported values as of 29 February, and a topped-up net initial yield of 7.5%. The portfolio has a gross annualised rental income of £12.5 mln, a weighted average unexpired lease term of 7.3 years and occupancy of 98.4%.
Mike Watters, CEO at RDI, said: 'Together with the disposal of Schloss Strassen Center in Berlin just last week, 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 £330 mln of disposals and our teams working on these transactions deserve to be commended for markedly reducing our exposure to the retail sector.
'This major transaction also further reinforces our balance sheet by bringing our leverage down significantly whilst extending our cash position. Having now achieved a number of our strategic priorities, the company is in a strong position.'
The assets comprise Banbury Cross Retail Park, Banbury; St David’s Retail Park, Bangor; Milton Road Retail Park, Edinburgh; Queens Drive Retail Park, Kilmarnock; Priory Retail Park, Merton, London; and The Arches, Watford, London.
RDI said that the sale represented a significant step in its ongoing repositioning, reflecting a pro-forma reduction in its retail exposure to 11.8%. In February, this exposure was around 28.4%. According to the firm, RDI has another €50.5 mln of German retail assets subject to disposal and at various stages of negotiation.
The sale also reduces an outstanding revolving credit facility, worth a total of £137.5 mln, by around £100 mln. The remaining cash will be held by RDI.
The disposal, which is a sale of the six associated special purpose vehicles, is anticipated to complete in mid-October 2020.
