19th Nov 2015 10:39
LONDON (Alliance News) - Custodian REIT PLC on Thursday said it has agreed to buy a package of 11 commercial properties in the UK for GBP69.4 million, while its lender has agreed to make more funds available under the UK property investment company's revolving credit facility to cut the "cash drag" associated with raising new equity.
Custodian REIT said it will acquire the commercial properties in two tranches, with completion due in January 2016.
"The target portfolio is consistent with the company's investment policy, comprising smaller size, good quality, secondary offices, retail and industrial assets, diversified by tenant and region," Richard Shepherd-Cross, managing director of Custodian Capital Ltd, the company's discretionary investment manager, said in a statement.
Shepherd-Cross expects the acquisitions to improve returns to shareholders through the deployment of cash, unutilised debt, and proceeds from an upcoming issue of equity.
The first part of the property portfolio will be acquired for GBP28.0 million, funded through existing cash and credit facilities.
The company plans to acquire the remainder of the portfolio depending on the outcome of its proposal earlier this month to raise up to 75.0 million by selling new shares in a placing, open offer, and an offer for subscription.
Meanwhile, the property investor's revolving credit facility has been increased to allow the company to borrow up to GBP35.0 million. The maximum amount previously provided by the lender, Lloyds Bank PLC, part of Lloyds Banking Group PLC, was GBP25.0 million. The termination date of the facility has been extended to November 13, 2020.
"Increasing the funds available under the revolving credit facility to GBP35.0 million and extending the term improves the company's overall debt profile and extends our ability to utilise the revolving credit facility to reduce the impact of 'cash drag' following new equity issues, enhancing future shareholder returns," Shepherd-Cross said.
Shares in Custodian REIT were down 0.2% at 104.75 pence on Thursday morning.
By Samuel Agini; [email protected]; @samuelagini
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