09 May 2016
K&C REIT plc, the residential real estate investment trust ("REIT") group, is pleased to announce that, on 6 May 2016, the Company agreed to acquire the entire issued share capital of The Osprey Management Company Limited from Ms Susan Hards for an aggregate consideration of £1.6 million (the "Acquisition"). Osprey owns a portfolio of freehold interests in a number of high quality retirement and residential properties in London and southern England. In addition, Osprey provides property management services to the occupants in most of the properties in the freehold portfolio and to other residential and industrial properties. The consideration will be satisfied by a payment of £1.3 million in cash and issuance to the vendor of three million K&C ordinary shares credited as fully paid up at 10p per share.
Highlights of Osprey
Tim James, Managing Director of K&C REIT, commented:
"We are delighted to have the opportunity to add to our property management resources and buy assets in excellent areas in portfolios that can capitalise on K&C's considerable property expertise. We are particularly pleased that, in every way, the Acquisition supports our investment strategy of seeking and acquiring high quality properties held in special purpose vehicles where the owners are seeking an exit. We also look for properties which, by employing the expert long-term management that K&C can deliver, offer our shareholders the opportunity for greater returns.
We feel that Osprey is an ideal proof of our investment strategy."
|K&C REIT plc||[email protected]|
|Tim James, Chief Executive||+44(0) 20 3793 5236|
|Stockdale Securities Limited|
|Robert Finlay/Rose Ramsden||+44(0) 20 7600 6100|
|Yellow Jersey PR||+44 (0) 7768 534641|
|Philip Ranger/Harriet Jackson|
Notes to Editors:
K&C's objective is to build a substantial residential property portfolio that generates secure income flow for shareholders through the acquisition of SPVs (Special Purpose Vehicles) with inherent historical capital gains. The Directors intend that the group will acquire, develop and manage residential property assets in Central London and other key residential areas in the UK.
Details of the Acquisition
Osprey commenced trading in 1985, originally as part of Speyhawk Retirement Homes Ltd, to manage luxury retirement properties. Today, the business includes a portfolio of freehold interests comprising mainly residential apartment blocks, built to a high standard in the 1980s, with a total of 172 units. The majority of the value of the portfolio lies with three 'core' properties that are located in and around London. The portfolio includes:
· The core properties, three freehold blocks located in West Hampstead and Bromley, comprise 90 leasehold apartments that carry a stipulation that occupants must be not less than 55 and 60 years of age. Sixty-two of these apartments have leases with less than 70 years to expiry. In addition, Osprey owns a freehold apartment used by the manager in each block
In four of the owned and managed retirement blocks, Osprey has the exclusive right to earn sales commissions of either 2.5% or 3% from remarketing. Osprey also manages five residential portfolios, comprising 72 flats and 23 houses, and one industrial portfolio of 12 units.
The Acquisition provides a diversified range of revenue streams:
In addition, and subject to the Company securing further funding, K&C may seek to acquire certain leasehold interests when they become available for purchase.
Osprey's performance over the four years to 30 September 2015 is set out below. Income fluctuates depending on the volume of lease extensions and sales commissions.
|Year to September||Average
|Total gross income||221||195||288||146||256|
|Adjusted* pre-tax profit||115||80||177||48||155|
* pre-tax profit has been adjusted to exclude non-continuing costs of existing directors of Osprey
Funding for the Acquisition will be provided by a combination of (i) a new external debt based facility of up to approximately £1.1 million, (ii) £0.1 million via an extension of the Company's existing bank facility and (iii) up to £0.2 million from the Company's cash resources. The Company has a new committed external debt-based facility for the purposes of funding the Acquisition but is also considering an alternative proposal. A further announcement on the terms of the selected facility will be announced in due course as appropriate. Following completion, which is due to occur on 26 May 2016, the Company is expected to have cash resources of approximately £0.4 million.