RDI has announced the exchange of contracts with Volksbank eG Braunschweig Wolfsburg to sell its Bahnhof Center in Altona, Hamburg for €91.0 million.
The disposal, which is in line with RDI’s strategic decision to exit its German retail portfolio, reflects a net initial yield of 4.6% and a 9.6% premium to the 28 February 2019 market value. The disposal is expected to complete on 31 December 2019 and remains subject to certain conditions being satisfied.
Bahnhof Altona is a 15,000 sqm retail centre which is integrally linked to the Altona train station and underground transport network. The centre fronts the entrance to the station platforms and comprises of twenty-two stores across three levels and a 496 space multi-storey car park. The centre produces net rental income of approximately €4.5 million p.a. (£4.1 million p.a.) and is anchored by Media Markt with other key tenants including Lidl, Apcoa, BHG and Rossmann.
The property is currently financed through a banking facility totalling €45.0 million at an all-in rate of 2.70% which is anticipated to be repaid on completion. The net proceeds from the transaction, following the repayment of this debt facility, estimated capital gains tax of approximately €5.8 million and certain transaction costs, is anticipated to be approximately €39.0 million (£35.4 million).
In line with RDI’s strategic objectives, the net proceeds will be used to efficiently reduce leverage through a reduction of the group’s revolving credit facility, that will create enhanced headroom and liquidity. The disposal will also result in a further material reduction in RDI’s retail exposure to approximately 35% of the portfolio after accounting for the derecognition of the Aviva shopping centre portfolio.
Further updates on RDI’s disposal programme in respect of the German portfolio will be provided with the release of its full year results, scheduled to be published on 24 October 2019.
Mike Watters, CEO of RDI, commented:
“The sale of the Bahnhof Center in Hamburg is in line with our stated strategy to reduce RDI’s retail exposure and focus the portfolio on the UK market. The sale price of €91.0 million reflects a 9.6% premium to the last reported value for the centre and was achieved following a competitive bidding process which drew a number of institutional investors. As previously indicated, the net proceeds from the sale of assets currently being marketed will be deployed to reduce Group debt and strengthen the overall balance sheet at a favourable time in terms of the Euro’s relative strength to Sterling.”