14th Mar 2007 13:07
Grainger PLC14 March 2007 14 March 2007 Grainger plc GRAINGER INVESTS AN ADDITIONAL £84.4 MILLION IN G:RES1 AND G:RES1 ACQUIRES 700-UNIT EAST LONDON PORTFOLIO FOR £205 MILLION G:res1 Limited (the "Fund" or "G:res1"), the residential investment fund advisedby Grainger ("Grainger" or the "Company"), announces today that it has exchangedcontracts to acquire a 700-unit market let portfolio from The Ability Group for£205 million. At the same time, G:res1 is also pleased to announce that it is continuing tosecure additional equity from leading organisations. Nomura Real Estate CapitalManagement Co. Ltd has committed £10 million of equity to the Fund, bringing thetotal investment by institutions in the Fund to £66 million in aggregate. Oncompletion of the Ability portfolio transaction, it is anticipated that the fundwill have total equity of approximately £199.7 million. Grainger's current investment in the Fund is £49.3 million representing 55.5% ofG:res1. As part of this transaction, Grainger will subscribe for shares in G:res1 for £84.4 million in cash and as a result Grainger's holding in the Fundwill increase to 67%. The increase in Grainger's holding will bring the Group'stotal investment in G:res1 to £133.7 million. By making the additional investment in the fund, Grainger expects to benefitfrom the capital growth in its stake, pro rata distributions on a semi annualbasis, recurring management fees and a potential promote based on theperformance of the fund payable at the end of its life. This investment isanticipated to be earnings enhancing for Grainger. The 55,777 sqm (600,162 sq ft) portfolio acquired from The Ability Groupcomprises predominantly newly built or refurbished properties and includes 232residential, 256 live/work and 128 commercial units and 84 parking spaces. Theaverage value of the space is £341 per square foot. Over 90% of the properties are located to the north of the City of London in theBoroughs of Hackney and Islington, locations set to benefit from infrastructureand improvement works to prepare East London for the 2012 Olympic Games. Aroundhalf of these properties are located adjacent to new train stations that will becreated for the East London line. The portfolio has been built up over the last 10 years by Andreas Panayiotouthrough development and conversion specifically to create a high qualityportfolio for rent. The quality of design and attention to detail has resultedin good sized, well proportioned units created to appeal to the tenant base ofyoung professionals working in central London. The Fund secured an option agreement to acquire the portfolio through exclusivenegotiations with the Ability Group, who were advised by Allsop. Thisacquisition underlines the Fund's strategy of targeting acquisitions where valuecan be added through the application of Grainger's expert and innovativemanagement skills. It also demonstrates Grainger's ability to source qualityassets through its extensive network of contacts. This announcement follows the Fund's launch on 22 November 2006 with a seedportfolio of approximately 1,400 residential properties, which wereindependently valued on 30 September 2006 at £210 million. On completion of thetransaction in March, the Fund will hold investment assets comprising 2,172individual units in 56 blocks/clusters of property valued at circa £412 millionand with a gross annual rent of approximately £21 million. At the end of March,90% of the Fund's total portfolio will be located in London and the South East. The Fund will, at completion, be capitalised with, in aggregate, £230 million ofdebt provided by Barclays Capital. Commenting, Rupert Dickinson, Chief Executive of Grainger, said: "The acquisition of this portfolio means that G:res1 is substantially investedwithin four months, well ahead of its three year target. We are particularlypleased to have been able to secure this deal off-market on behalf of the Fund'sinvestors and believe this clearly demonstrates Grainger's ability to delivervalue not only to its shareholders but the investors in the independentlymanaged fund." Quinton Hill-Lines, Director of Corporate Development for Grainger added: "We are delighted to welcome Nomura as a co- investor in G:res1. Following thistransaction G:res1 is now resuming the capital raising process and has widenedits scope to include selected UK institutions and are encouraged by the ongoingpositive response." -ENDS- For further information: Grainger plc: Rupert Dickinson/Quinton Hill-Lines Tel: +44 (0)20 7795 4700 Financial Dynamics: Stephanie Highett/Dido Laurimore/ Tel: +44 (0)20 7831 3113 Jamie Robertson Notes to editors: Gres:1 is an independently managed fund with a focussed value-add strategyproviding investor returns through acquiring and managing a diversifiedportfolio of residential property in the UK for both rental and capital growth.This will allow investors to benefit from Grainger's nationwide asset andproperty management expertise. The fund is geared to approximately 60% loan tovalue. Grainger plc is the UK's largest quoted property owner in the UK. Theinvestment in the fund is the latest in a series of significant transactionsmade by the Group since it announced its results to 30 September 2006 inNovember 2006. In January it declared its £71.6 million offer for The CapitalAppreciation Trust (Isle of Man) plc unconditional and in February it announcedthe £134.5 million acquisition of a financial interest in a portfolio of equitymortgages from the Church Commissioners. These two transactions, together withits further investment in G:res1 represents total major investments of £290.5million in the current financial year. M3 Capital Partners Limited acted and continues to act as adviser to Graingerwith respect to the structuring and placement of the Fund. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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