UK industrial REIT Segro has taken full control of the Airport Property Partnership (APP) joint venture in the UK with Aviva Investors by acquiring Aviva's 50% stake for £365 mln (€420.6 mln).
The purchase amount breaks down into £216 mln of cash and the disposal to Aviva Investors of £149 mln of assets, Segro said on Friday.
Segro acquired its 50% stake in APP in June 2010 and acted as asset manager for the joint venture, with Aviva Investors acting as fund manager.
APP comprises 21 direct property assets, valued at £1.1 bn and totalling 350,000 m2, 87% of which (by value) are located at London's Heathrow Airport, including the majority of the airport’s airside cargo facilities.
At end-December 2016, the portfolio had a vacancy rate of 7.5% with an average lease length of 11 years to the earliest of break or expiry. The portfolio also includes one development project which is underway and is expected to complete in 2017.
Commenting on the acquisition, Segro's CEO David Sleath, said: 'We believe now is the right time to take full control and ownership over APP in which we see a number of opportunities to realise further value from its unique portfolio in the short and long term. We look forward to pursuing our development plans, taking advantage of strong occupier demand for facilities around Heathrow from customers needing rapid access both to the airport and to Central London.'
Rights issue
Simultaneously with the acquisition, Segro said it was launching a 1-for-5 rights issue to raise £573 mln (€660 mln) in gross proceeds. The net proceeds of £556 mln will be used to finance the £216 mln cash element of the acquisition of Aviva’s 50% stake in APP.
The rights issue will be fully underwritten by BofA Merrill Lynch, UBS Investment Bank, Barclays, BNP Paribas and HSBC.
'The new capital we are seeking to raise will allow us to further progress the implementation of our development and income growth strategy, taking advantage of a very favourable occupier market backdrop,' Sleath said.
'In addition to refinancing the acquisition of the 50% stake in APP we have announced today, the proceeds will fund further attractive development projects over and above those we funded with the proceeds of the placing in September last year,' he added.
