Raven Russia Limited subsidiary acquires logistics park in Moscow
The Board of Raven Russia is pleased to announce that a subsidiary of the Company has entered into an agreement (‘the Agreement”) for the acquisition of a logistics park in Moscow.
The Agreement provides for the subsidiary of the Company to acquire a completed warehouse complex from Industrialniy Park “Sever” Limited Liability Company, a company incorporated in Russia. Initial consideration of RUR 5.119 billion ($86.58 million), is payable with a further deferred element of consideration due within 18 months of completion, dependent on letting of vacant space. Deferred consideration payable is estimated to be between RUR 1.51 billion ($25.50 million) and RUR 1.97 billion ($33.29 million). Consideration is satisfied in cash.
The yield on the maximum consideration payable is expected to be 11.38 percent with a reversionary yield of 12.51 percent.
The purchase price represents a capital value of approximately RUR 36,000 ($600) / sqm, which is at or below replacement cost.
The agreement is conditional on the satisfaction of certain escrow arrangements and the acquisition is expected to complete in early December.
The property comprises a Grade A warehouse complex of 195,132 sqm situated to the north of Moscow, approximately 2 Km from the new Moscow to Saint-Petersburg toll road. The property was built between 2014 and 2017 and is 73 percent let to a number of local and international tenants, including OBI, O’KEY retail group, Major Logistics, Miratorg and R-Pharm. Leases are rouble-denominated, and current annualized income is RUR 616 million ($10.42 million) rising to RUR 886 million ($14.99 million) on a fully let, ERV basis. The current unexpired weighted average lease term is 4 years.
Glyn Hirsch, Chief Executive of Raven Russia said, “We are pleased to announce our second acquisition of the year at a point which is increasingly feeling like the bottom of the cycle. ERV yields of 12+ percent and capital values at or below replacement cost represent excellent investment opportunities. In sterling, rents are now £4.60 per square foot and capital values £43 per square foot. We have commenced discussions on investment debt finance on this deal which should result in a high return on the equity we ultimately invest. The Russian central bank’s further cut in rates last week to 8.25 percent should also help sentiment. Hopefully we will have more of the same (or better) to come.”