Redefine International, an FTSE 250 income-focused UK real estate investment trust, continues to recycle capital, announcing the sale of its Leopard supermarket portfolio in Germany.
The group has announced the successful exchange of contracts with Patrizia Immobilien for the sale of the Leopard portfolio for a purchase price of €205m, reflecting a 10.8%, or €20m, premium to the portfolio’s August 31 book value.
Redefine International CEO Mike Watters said the “opportunistic disposal capitalises on an exceptionally strong investment market and an approximate 11% increase in the value of the euro relative to sterling over the investment period”.
The company invests in the UK and Germany and could recycle the capital into the UK.
It was “consistently looking to realise value by recycling capital at attractive prices” and was pleased to announce the disposal, which “capitalises on an exceptionally strong German investment market”, he said.
“Following the deal, our overall exposure to Germany will decline from 27% to 18% and we anticipate reinvesting the proceeds into the UK, where we are witnessing some particularly attractive investment opportunities,” he said.
The portfolio comprises 66 German retail properties, including stand-alone supermarkets, retail parks anchored by food stores and cash-and-carry stores totalling more than 138,000m² in lettable area.
The disposal will include the repayment of €86.1m in debt facilities, with a weighted average cost of debt of 1.4%.
The portfolio’s annualised net rental income of €12.7m reflects a net initial yield of 5.8% on the sales price and an approximate 8.3% yield on equity.
A portfolio manager at Investec Asset Management, Peter Clark, said the disposal was in line with the company’s updated strategy.
“The capital will likely be redeployed,” he said. “However, this will be done at a lower leverage ratio and bring the company pro forma loan-to-value ratio to under 50%.”