Redefine International, an FTSE 250, income-focused UK real estate investment trust (Reit), has completed the sale of its Sytner BMW showroom in High Wycombe to a UK pension fund for £26.1m.
The disposal provided an opportunity to recycle capital out of an asset with limited near-term rental growth prospects at a low initial yield, said Redefine International CEO Mike Watters.
The sale price reflects a net initial yield of 5.0% and a premium of 5.8% to the February 28 book value. In the first half of the financial year, the company disposed of £95m in assets at an average premium of 12.4% to the August 31 2016 book value, said Watters. It has since then exchanged or completed the disposal of £46.6m more in assets including the sale of High Wycombe, at a 5.8% average net initial yield and a 10.7% premium to the February 28 book value.
Redefine International’s share price has lost nearly 30% over the past three years. But Ahmed Motara, portfolio manager and property analyst at Stanlib, said it could be an attractive investment.
It offered a near 7% forward dividend yield, albeit with medium-term growth in dividends expected to be in the low single digits at best. The yield was among the highest for UK Reits and was attractive for investors amid low interest rates, he said.