MEDIA

Exchange of binding contracts to acquire 17 apartments in West London

03 April 2018

This announcement contains information which, prior to its disclosure, was inside information for the purpose of the Market Abuse Regulation

Highlights

  • Total consideration of £5.35 million
  • Gross annual yield on consideration of 4.8 per cent
  • Transaction will significantly increase Net Asset Value ("NAV") per share.

KCR Residential REIT plc ("KCR" or the "Company") is pleased to announce that it has exchanged binding contracts to acquire three freehold blocks containing 16 studio, one- and two-bedroom apartments in Ladbroke Grove and a two-bedroom apartment in Harrow for a total consideration of £5.35 million excluding costs, payable in cash. KCR is acquiring the entire share capital of the SPV that owns the freehold properties. The transaction is contracted to complete no later than 29 June 2018.

The apartments are fully let to private tenants. The total rental income is over £0.25 million, generating a gross annual yield on consideration of 4.8 per cent. The average unit value of the acquired properties is £314,700 and average monthly rent is approximately £1,250 (£32 per sq. ft. per annum).

There is strong demand from tenants in this area (in particular in the lower rental price bracket in which KCR focuses) with a limited supply of such properties, as many are being converted back to single family homes.

This transaction is in line with KCR's acquisition strategy:

  • blocks of studio, one- and two-bed apartments
  • lower rental price bracket where there is high tenant demand
  • generating immediate income
  • close to transport and shopping / leisure facilities
  • asset management potential to enhance rental and capital values
  • focus on acquiring SPVs that own property to realise benefits afforded to REIT structures.

Dominic White, Chief Executive of KCR, said: "This is a highly accretive transaction for KCR that has a significant positive impact on revenue. We estimate that NAV per share will increase by more than 20 per cent as a result of the acquisition. 

We are currently working on a number of similar acquisitions in the south and south-east of the UK that would mark a step-change in the size and growth of KCR. We will update the market when appropriate."

 

Contacts:

KCR Residential REIT plc
Dominic White, Chief executive
info@kcrreit.com
+44 20 3793 5236
Arden Partners plc
Steve Douglas
+44 20 7614 5917

 

Notes to Editors:

KCR's objective is to build a substantial UK residential property portfolio that generates both secure income flow and increasing net asset value for shareholders. KCR acquires blocks of studio, one- and two-bed apartments that are close to transport links, shopping and leisure. As a Real Estate Investment Trust, KCR predominantly acquires buildings owned by Special Purpose Vehicles ("SPVs") with inherent historical capital gains since this acquisition structure can often deliver tax advantages to the REIT and its shareholders.

 

 

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