2nd Oct 2013 14:35
LONDON (Alliance News) - Quintain Estates and Development PLC Wednesday said it had agreed to sell its SeQuel regional property portfolio, along with an additional property in Leeds, to AIM-listed Palace Capital for GBP39.05 million.
Palace Capital said it would pay for the properties by raising GBP23.5 million through a share issue and using a GBP20 million debt facility from Nationwide. Quintain said it would take part in the share issue, taking a stake of about 2.5% in Palace Capital for GBP550,000 as a result.
The Sequel portfolio consists of 24 mixed use commercial properties in England and Wales, generating net rent of about GBP5.2 million or a yield of about 13.2%, Palace Capital said. The individual properties in the portfolio have been valued by Cushman & Wakefield at an aggregate sum of GBP44.2 million and at GBP39.7 million on a portfolio basis, it added.
Quintain said the properties it is selling made a pretax loss of GBP11.8 million in the year ended March 31.
"There are considerable opportunities with this portfolio for active management to increase the yield and capital value and we are excited about this purchase," Palace Capital said.
"This is stage two of our stated strategy which is to purchase high yielding commercial investment properties capable of active management mainly outside London. Stage one was the acquisition of Hockenhull Estates, a portfolio of nine properties in Cheshire which has performed very well in that we have extended a number of leases and currently there are no voids," it said.
Separately, Palace Capital reported a pretax loss of GBP78,821 in the first half of its financial year compared with a loss of GBP65,086 a year earlier, as revenues decreased and administrative costs rose. Last year's result for the six months to end-July was helped by a write back of a provision previously made for a bad debt.
"We are continuing to look for additional acquisitions which provide the appropriate return and we look to the future with confidence," Palace Capital Chairman Stanley Davis said in the earnings statement.
Palace Capital shares are currently suspended. Quintain Estates was down 3% at 84.18 pence Wednesday afternoon.
By Steve McGrath; [email protected]; @stevemcgrath1
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