LONDON (ShareCast) - (ShareCast News) - Palace Capital extended its investment reach into the heart of Halifax on Monday, announcing it had acquired the entire issued share capital of Gregory Projects (Halifax).
The AIM-traded property investment company said the the target was a special purpose vehicle, and the owner of the Broad Street Plaza leisure development in the West Yorkshire town.

Palace Capital said the amount it paid reflected a freehold value of £24.18m, with the acquisition being an off-market transaction. The consideration comprised of Palace Capital assuming Gregory's existing facility with Barclays of £15.2m, and £9m of Palace's existing cash resources.

Broad Street Plaza, completed in 2012, was on an island site opposite the bus station and Town Hall in Halifax. It consisted of 113,000 square feet and a 429-space multi level car park, with a current net rental income of £1.78m per annum. The initial net yield on the investment was 7.25%, rising to 7.9% in 2017 after rent reviews.

"Palace Capital is delighted to announce another significant acquisition of a major regional leisure scheme. Broad Street Plaza was chosen by The Variety Yorkshire Property Awards in 2012 as the Development of the Year. This is a well located leisure scheme with a superb quality of tenants on good leases with continuity of income for an average of at least fifteen years," said chief executive Neil Sinclair.

"As the cash element for this transaction has been met from our existing resources, this acquisition is very earnings enhancing. As I stated two weeks ago when we announced the acquisition of 249, Midsummer Boulevard, Milton Keynes we will only buy when we find value. Further to that, to have a yield of close to 8% next year with a WAULT of 15 years to the break is highly attractive in the current climate," he added.

At the same time, Palace entered into a new £30m, five year facility with National Westminster Bank, of which £10m was fixed and £20m a revolving facility. The margin was 2.5% over LIBOR on the amounts drawn and 1.25% on any undrawn amount.

"The new, larger bank facility we have entered into will provide additional resources at lower interest rates for further acquisitions and working capital for a number of asset management activities over the coming months. The group continues to be conservatively geared with net debt at 38% and holds £20 million of unencumbered properties," Sinclair explained.

"We continue to seek further targets preferably off market which meet with our strict acquisition criteria."

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