RDI has announced the completion of the disposal of 127 Charing Cross Road for the headline price of £59.25 million to Nomura Real Estate UK Limited.
This disposal price reflects a 1 per cent premium to the 31st of August 2020 valuation, a net initial yield of 3.1 per cent, based on the contracted rental income and a capital value per of £1 481 per square feet on the existing area.
The property was acquired as part of the AUK portfolio acquisition in March 2016 for £42.6 million and the disposal price reflects a 39.1 per cent increase in value since the acquisition.
The growth in value has been supported by a successful asset management strategy including securing full planning permission, which provides an opportunity to increase the overall area of the property by 41.1 per cent through the development of three additional floors.
Stephen Oakenfull, CEO of RDI commented: “This disposal marks the conclusion of a well-executed and successful asset management plan designed to enhance the value of an income generating asset. We believe that the sale captures a significant proportion of the asset’s potential value and provides us with the ability to recycle capital into opportunities with stronger risk-adjusted returns”.
“In the meantime, the proceeds of this transaction further strengthen the balance sheet where we now have cash and available facilities totalling approximately £275 million to execute on our strategy”.
RDI’s material progress has continued with the company’s income led total strategy which comprises of its full exit from retail (and Germany), medium term exit from its hotel exposure, its focus on distribution, industrial, and its London office and its focused capital allocation.
Despite the continuous national lockdowns impacting operating assets and earnings in the company’s 2021 financial yearend, the UK vaccination programme is now well underway and provides a clearer path to recovery. RDI’s balance sheet and liquidity position remain exceptionally strong to manage through this period and capitalise on any market dislocation with £275 million of cash and available facilities and a loan-to-value (LTV) of 32.3%, well within the target of 30-40%.