Disposal of Properties
Posted on August 24, 2020
Glenstone Property plc (“Glenstone”) are pleased to report the completion of the sale of four West London residential properties of multiple occupation let to The Collective for a total consideration of £25m. This represents a net initial yield of 3.38%.
The Collective have occupied these properties for many years. Their business model is to now own the freeholds, whereby they first approached Glenstone late in 2019 seeking to acquire the freehold titles.
The consideration is made up of £22m in cash, £2m in convertible loan notes maturing in 2 years and £1m in loan notes maturing in 3 years. Both loan notes are interest bearing. Glenstone have had a long relationship with and exposure to The Collective and the convertible element of the consideration maintains that exposure to the potentially exciting co-living sector.
The receipt of £22m in cash also immediately brings down the groups gearing to 13% and provides funds to be able to reinvest in higher yielding assets and to accelerate the group’s strategic objectives of further sector diversity. The sale also boosts the current year income with a significant realised gain.
The Board are of the opinion that this is a prudent, sensible and opportunistic sale given the current climate and in line with the existing strategy of reducing the group’s exposure to residential and a potential threat of one tenant comprising almost 10% of the entire portfolio income. Whilst the transaction was off market, recommendation of valuers and advisors was obtained.
Managing Director, Ben Green, commented "to have successfully executed this complex transaction in a period of lockdown is testament to the parties long standing relationship and commitment. We are now in the enviable position of low gearing and significant funds to redeploy"