5th May 2016 09:39
LONDON (Alliance News) - Kennedy Wilson Europe Real Estate PLC on Thursday announced the completion of two acquisitions in south Dublin for just under GBP150.0 million, and said it is "poised to unlock" further net operating income growth from its portfolio.
The FTSE-250 listed property investor said it completed GBP19.1 million of acquisitions in the year to the end of March, and announced it has completed a further two acquisitions in separate announcements on Thursday.
Kennedy Wilson said it has purchased Towers Business Park in South Manchester from private equity firm Loan Star Management Europe Ltd for GBP82.0 million, reflecting a topped-up yield of cost of 6.7%. The business park comprises of ten prime suburban offices totalling 289,100 square feet. The portfolio is 96% let, Kennedy Wilson added.
Kennedy Wilson also announced it has purchased two suburban office assets in Sandyford and Blackrock in south Dublin for an aggregate consideration of EUR76.9 million. The company said the purchase price of the site in Sandyford of EUR62.5 million reflects a yield on cost of 4.0%, with the building only 68% occupied. The property in Blackrock, bought for EUR14.4 million, reflects a yield on cost of 6.8% and is 98.5% occupied.
The Sandyfield site had previously been owned by contractors Chase Arkle PLC, whilst the property in Blackrock Business Park was purchased from Hudson Advisors LP, which took control of the two office properties in 2014, via a loan acquisition.
All three acquisitions will be funded from Kennedy Wilson's existing cash resources. Including the acquisitions announced on Thursday, Kennedy Wilson said its Dublin suburban office portfolio comprises of four assets totalling EUR90.1 million in value across 279,700 square feet. The portfolio is 75% let, the company said.
Kennedy Wilson added that it is on track to deliver its targeted disposal programme of GBP300.0 million, having sold GBP143.9 million of assets in the period to the end of March. Kennedy Wilson said this takes its total sales as at period end to GBP268.5 million, generating an average unlevered capital return of 24% over a hold period of 17 months and 6.4% ahead of preceding valuations.
It said this, along with its "active sales pipeline currently being marketed", means it is well placed to meet its target.
During the period, Kennedy Wilson said its completed lease transactions contributed to GBP600,000 of incremental annualised net operating income, with commercial lease transactions adding around GBP400,000 and Irish private rented sector contributing a further GBP200,000.
Kennedy Wilson said new letting and rent reviews were the main contributors with 17 rent reviews completed in the period at 3.6% above valuers' estimated rental values and 17% ahead of previous passing rent.
Kennedy Wilson noted that broader market concerns have not impacted its disposals to date, given the smaller lot sizes of its sales. Its portfolio stands at GBP2.78 billion across 287 properties currently, Kennedy Wilson added, with portfolio occupancy at 95.8%.
The company said it has only one store which is occupied by BHS, representing less than 0.2% of portfolio net operating income, but said "the administrations of both BHS and Austin Reed Group related to systemic issues specific to these names rather than the state of the high street or overall UK retail sector, which continues to show promise".
The company said it continued to make progress with its development and refurbishment during the period. At Buckingham Palace Road in London, Kennedy Wilson said refurbishment works are "progressing well" with completion to be delivered ahead of the 2016 rent reviews and expiries.
Kennedy Wilson added practical completion of refurbishment at its Aberdeen Seafield House is expected in the second quarter, whilst a planning application has been submitted for the Friars Bridge Court property in London.
The company said its quarterly interim dividend remains at 12.00 pence per share, and Kennedy Wilson said it was on track to deliver and annualised 48.00p per share for 2016.
"2016 will be a year of significant asset management for Kennedy Wilson. With a strong level of rent review activity, we have a good opportunity to deliver material organic net operating income growth by narrowing the gap between reversionary in place rents and estimated rental values," Chief Executive Mary Ricks said.
"Our portfolio remains in a robust position with good occupational demand across our core sectors and geographies. We also have an ample level of liquidity for acquisitions should we wish to capitalise on any potential market dislocations," said President and Chief Executive Mary Ricks.
Shares in Kennedy Wilson were up 1.2% at 1,090.00 pence on Thursday morning.
By Hannah Boland; [email protected]; @Hannaheboland
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