Redefine International sells office block in Manchester

Aviva acquired the asset on behalf of Essex County Council.

Located at 201 Deansgate in Manchester, the property provides 7,770 m2 of office space and delivers annual net rental income of £1.1 mln. The building was originally acquired by Redefine International as part of the AUK Portfolio in March 2016 and the sale price represents a net initial yield of 3.6% and a 14.3% premium to the last reported book value. The geared IRR over the investment period was 22%.

'The disposal of 201 Deansgate represents yet another significant value-enhancing opportunity that the AUK Portfolio offers the company,’ said Mike Watters, CEO of Redefine International. ‘After less than a year of ownership, we have delivered an excellent 14.3% premium to book value on behalf of our investors, while also de-risking the portfolio from a number of upcoming lease breaks due on the property.'

The proceeds from the sale will be used to fund the refinancing and extension of certain of the company’s debt facilities. Terms have been agreed, Watters said, with the company contributing approximately £25 mln of equity to reduce the loans. The improvement to the terms of the debt facilities will deliver an attractive return on the equity contribution of around 10% per annum, he said.

Redefine International, which has a primary listing on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange, will provide further details on the company’s capital structure at its Capital Markets Day scheduled for 6 February.

The company has a diversified portfolio, independently valued at £1.5 bn, focused on the UK and Germany and weighted towards well-located properties across a range of sectors including retail, offices, distribution and hotels. Its investment philosophy, said Watters, is to 'effectively allocate recycled capital from mature assets into sectors and locations with strong occupier fundamentals and individual assets with realisable upside'.