Acquisition of 17 Virgin Active Racket Clubs
British Land Acquires 17 Virgin Active Premium Racket Club Properties
for £179 million
British Land announces that it has agreed to buy a portfolio of freehold and leasehold racket clubs from Societe Generale for £179 million. The portfolio consists of 17 premium racket clubs which will be let on new, 25 year leases to Virgin Active pending its acquisition of the Esporta business. The purchase is conditional on the Office of Fair Trading's approval of Virgin Active's acquisition of the Esporta business and will be funded through the Group's existing facilities.
The properties have been acquired at a net initial yield of 7.3% and an equivalent yield of 8.4% and will generate an initial annual net rental income of £13 million. The leases are subject to a fixed uplift at year five, compounded at 2.5% pa, followed by annual RPI uplifts of between 1% and 4% for the remainder of the term. The average rent on the new leases is £8 per sq ft. The properties acquired have a total of 1.7 million sq ft of leisure and gym facilities spread over 380 acres of land. The purchase price represents a capital value of just over £100 per sq ft.
Nearly 85% (by value) of the clubs acquired are located in the South East of England, with nearly half of the clubs by value within the M25. Offering an extensive range of facilities, the clubs are all well located on the edge of major towns, are highly accessible and dominant in their catchment areas.
Virgin Active will be the second largest provider in the UK with 124, mainly mid to high end market clubs and over 425,000 members. The acquisition of the Esporta business will provide Virgin Active with a strong presence in the premium health club sector where membership and revenues have remained resilient. The Esporta clubs are expected to benefit from Virgin Active's proven management skills alongside significant new investment.
The purchase of the Esporta properties brings British Land's total acquisition spend over the last 18 months to £784 million. The acquisitions, which include Drake Circus shopping centre in Plymouth, Green Lane's shopping centre in Barnstaple and Hutchinson 3G's UK head office in Maidenhead, as well as a number of development properties, generate annualised incremental rental income of £46 million.
Chris Grigg, Chief Executive of British Land said, "While we remain focused on our core retail and Central London office markets, this acquisition demonstrates British Land's ability to work with banks to unlock opportunities to create incremental value. These high quality assets will be operated by a strong, established management team and provide us with a secure and growing income stream. The acquisition further underlines the strength of our property, structuring and financing skills and we expect more opportunities will continue to emerge in the coming year."
Enquiries:
Investor Relations
Sally Jones, British Land 020 7467 2942
Media
Pip Wood, British Land 020 7467 2838
Guy Lamming/ Gordon Simpson, Finsbury 020 7251 3801
Notes to Editors
About British Land
British Land is one of Europe's largest Real Estate Investment Trusts (REITs) with total assets, owned or managed, of £14.9 billion (British Land share £9.6 billion), as valued at 31 March 2011. Through our property and finance expertise we attract experienced partners to create properties and environments which are home to over 1,000 different organisations and visited byover 250 million people each year. Our property portfolio is focused on prime retail locations and Central London offices which attract high quality occupiers committed to long leases. Our occupancy rate of 97.8% and average lease length of 11.5 years are among the highest of the major UK REITs.
Retail assets account for 66% of our portfolio, around 80% of which are located at prime out-of-town sites. Comprising some 27 million sq ft of retail space across 90 retail warehouse properties, 99 superstores, 12 shopping centres and 10 department stores, the retail portfolio is generally modern, flexible and adaptable to a wide range of formats. Active asset management delivers the attractive space to both retailers and consumers.
London offices, located in the City and West End, comprise 32% of the portfolio (rising to an estimated 37% on completion of current development). 7 million sq ft of office space includes Broadgate, the premier City office campus (50% share) and Regent's Place in the West End. We are also investing £1.1 billion to create Central London's largest committed office development programme which will deliver 2.2 million sq ft of high quality space by 2014, including a 700,000 sq ft building at 5 Broadgate, the 610,000 sq ft Leadenhall Building in London's insurance district and the 500,000 sq ft NEQ building at Regent's Place.
Our size and substance demands a responsible approach to business and we focus on five areas which matter most to us and our key stakeholders: managing buildings efficiently; developing sustainable buildings; enhancing biodiversity, exceeding customers' expectations and focusing on local communities. We believe leadership on issues such as sustainability helps drive our performance and is core to our corporate aim of building the best REIT in Europe.
Further details can be found on the British Land website at www.britishland.com
This information is provided by RNS
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