RDI forward funds two Bicester units, sells Edinburgh office
By Josh White
Date: Thursday 13 Sep 2018
(Sharecast News) - Income-focussed real estate investment trust RDI has completed a forward-funding agreement to acquire two "high quality" distribution units in Bicester totalling 288,000 square feet, as well as completing the disposal of the Lochside office in Edinburgh, it announced on Thursday.
The FTSE 250 company said the transactions were in line with its strategy of recycling capital out of mature assets and into new growth opportunities.
It said it acquired approximately 13.5 acres of land in Bicester as part of a £26m forward-funding opportunity with Albion Land, to acquire two distribution units of 120,000 square feet and 168,000 square feet respectively.
The site was part of the 'Link 9' industrial and distribution development, with reportedly good access to the M40 and backed by a strong occupier market.
Construction of the first phase was set to commence "immediately", with an approximate eight-month development programme, and the second phase expected to begin before May next year, with completion in late 2019.
Both units would be developed on a speculative basis, however early stage discussions had already commenced with potential occupiers.
The firm said the transaction provided an opportunity to increase its exposure to well-located modern distribution units at an anticipated yield on cost of 6.5% once let.
RDI also confirmed it had completed the disposal of the 60,177 square foot Lochside Edinburgh office on 31 August for £13.1m, representing a net initial yield of 5.9% and a 13.7% premium to the last reported market value.
The asset was originally acquired as part of the company's AUK portfolio acquisition in March 2016 for £11m, at which point it was 18% vacant.
Through active asset management, the property was now fully let, which supported the sales price and premium to book value.
"This acquisition once again highlights our disciplined approach to improving the quality of our income focused portfolio, with disposal proceeds being promptly redeployed into growth opportunities," said RDI chief executive Mike Watters.
"The acquisition of high quality distribution assets in Bicester, through a forward funding agreement, presents a clear opportunity to increase our exposure to a sector with strong structural support and rental growth prospects, at an attractive entry price.
"We look forward to providing further details on our progress against strategic priorities at our year end results presentation on 25 October, following the release of the year end results."
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