An American investment company had paid out £503m to scoop up a portfolio of distressed British commercial properties from multiple receivers.
The London Stock Exchange-listed Kennedy Wilson Europe Real Estate purchased the sites from receivers working on behalf of Aviva Commercial Real Estate Finance. Included in the package, primarily located in England, are a Travelodge hotel in London’s King’s Cross, a Waitrose superstore in Saltash, Cornwall, and an Asda superstore in Hemel Hempstead.
Paperwork on the acquisition is expected to be completed by the end of January with the deal jointly funded through Kennedy Wilson cash and a new £352.3m secured loan facility with Aviva.
“This significant portfolio acquisition allows us to access a high quality mixed use portfolio with strong tenant covenants generating robust income streams at a material discount to the original loan amounts,” commented Kennedy Wilson president and chief executive officer, Mary Ricks.
“The portfolio benefits from a number of institutional quality investments with good individual asset liquidity across the remaining portfolio,” she added. “There are significant asset management angles, including growing income through lease re-gears, renewals, rent reviews and the leasing up of vacant space.”
In total the portfolio contains around 3.5-million sq ft of commercial and industrial floor space. Of that 98 per cent is occupied generating a net annual rent of £36.1m. Its top ten tenants include the likes of logistics provider Wincanton, Travelodge, and retailers Debenhams, Waitrose and Matalan.
Broken down by sector, 62 per cent of the portfolio is retail, food and convenience assets, followed by leisure at 14 per cent, industrial at 12 per cent, and office and hotels at six per cent.
Geographically, 54 per cent is situated in England with the majority of that share in London and the South East. Five per cent is spread across Scotland and Wales.
Ricks said the portfolio includes a number of strong institutional grade properties with the top ten assets representing 31 per cent of the purchase price and with a combined value of £153.5m.
Ewan Tocher is managing director at Aviva UK Life Commercial Mortgage Restructuring. “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 Kennedy Wilson as an investor.
“With gilt yields at all-time lows, we can now offer attractive and competitive all-in financing costs for quality portfolios owned by experienced operators and we are keen to develop this relationship further.”
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