UK regional property investor Palace Capital is acquiring a leisure scheme in Northampton by acquiring O&H Northampton Ltd for £1 and repaying £20.7m of debt and money owed to creditors. The cost equates to the valuation of the site by DTZ. This valuation can be increased by improving the rental returns on the site and refinancing the debt.
Santander is providing a loan facility of £11.39m to cover part of the debt taken on with the acquisition. A placing at 360p a share is raising £20m – the costs of the placing and acquisition will absorb £1.3m of this cash.
The property being purchased is a 190,000 square foot scheme called Sol Central, which includes an Ibis Hotel and a ten-screen Vue cinema. There is also a gym and a sports club, plus vacant units leased to Gala Casinos and a pub operator. On top of this there is an unlet restaurant site. Net annual rental income of £1.89m, including £287,000 a year from car park income, provides a yield of 8.86% on the buying price, including costs.
Palace’s existing property portfolio was valued at £102.8m at the end of March 2015, while net debt was £24.7m. Just after this, Bank House in Leeds was acquired for £10m. The NAV at the end of March 2015 was 396p a share.