Schroder European Real Estate Investment Trust has exchanged contracts to sell its Boulogne-Billancourt office asset in Paris for €104 mln.
The sale is structured as a forward funding, with the building being handed over to the purchaser in H1 2022, following completion of a comprehensive refurbishment which is being undertaken by the company.
The refurbishment and sale follows the agreement of a new 10-year pre-let contract with existing tenant Alten in June this year. The rental uplift is 39% higher than the previous rent paid.
The final sale price of €104 mln will deliver net sale proceeds of approximately €70 mln when completed, after deducting the €30 mln cost of refurbishing and re-letting the building. This represents a profit on cost of about 35%.
The sale proceeds will be received in stages with 50% of the price to be received on exchange of the definitive deed prior to this calendar year end 2020, and the remainder payable in installments over the subsequent 18 months as construction is completed.
The building was originally acquired in 2016 for €37.5 mln with the company identifying an opportunity to create significant value by undertaking a major repositioning of the asset.
Julian Berney, Chairman of the Board commented: ‘This is a transformational transaction, which will be highly accretive to shareholder returns. It is a strong endorsement of the Company’s strategy, to identify real estate where we can create significant value for shareholders through asset management, benefiting from our team’s local expertise inside the key markets.’ He added: ‘Our focus continues to be on driving the performance of the existing portfolio. This will provide a clear path to income growth and improving long-term shareholder returns and the Company’s rating.’
