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Acquisition of multi-let industrial and office property based in Knowsley, United Kingdom
Atlantic Leaf Properties Limited
(Incorporated in the Republic of Mauritius)
(Registration Number: 119492 C1/GBL)
SEM share code: ALPL.N0000
JSE share code: ALP
ISIN: MU0422N00009
www.atlanticleaf.mu (“Atlantic Leaf” or the “Company”)
ACQUISITION OF MULTI-LET INDUSTRIAL AND OFFICE PROPERTY BASED IN
KNOWSLEY, UNITED KINGDOM
INTRODUCTION
Shareholders are advised that on 23 March 2018, Atlantic Leaf, through its wholly-owned subsidiary
Trido Limited (collectively, “Atlantic Leaf”), concluded agreements and simultaneously completed the
acquisition of a multi-let industrial and office property known as Deacon Park in Knowsley, United
Kingdom (the “Property”) from JCAM Commercial Real Estate Property XVI Limited (the “Seller”)
(the “Transaction”).
RATIONALE FOR THE TRANSACTION
The acquisition of the Property is consistent with Atlantic Leaf’s strategy of investing in real estate
assets that deliver good returns for investors through both predictable income from long term leases and
capital growth. The Transaction is attractive as it provides high income while also offering potential for
mid to long term growth through active asset management.
The Property is located in the established industrial and business area of Knowsley which
accommodates hundreds of occupiers over 1,200 acres of land, including tenants such as Amazon and
Toyota. The area provides excellent transport connections throughout the North West of England.
The Property comprises an industrial warehouse that accounts for approximately 80% of the floor area,
with multi-let industrial and office space across the remaining 20%. The main industrial element of the
Property is made up of a 460,000ft2 warehouse facility fully let to B&M Retail Limited (“B&M”) on a
lease expiring in August 2022. B&M is a leading discount retailer operating across the UK and is the
primary operating entity of B&M European Value Retail S.A., a holding company listed on the London
Stock Exchange (“LSE”) and a constituent of the FTSE 250 index. Notwithstanding the relatively short
4.5-year remaining lease term, the warehouse facility’s current net effective rent is a very low GBP
1.52 pft2 which offers good potential for uplift, particularly when compared to a new build warehouse
that could achieve rents in the region of GBP 5.75 pft2 as evidenced in the current local market.
The office space is made up of one large 69,000ft2 block and 15 smaller industrial and office suites of
varying sizes. 60% of office space is let to Serco Limited (“Serco”), a large public services provider
and a key operating entity of LSE-listed Serco Group Plc, also included in the FTSE 250 index. Serco
Group Plc provides services to governments around the world, with Serco servicing the UK operations,
the group’s largest market. Serco has three leases at the property expiring between 2020 and 2023 at a
passing net rent of GBP 6.75 pft2. The remaining occupied units are let to a variety of tenants on rents
ranging from GBP 2 to GBP 14 pft2, on various leases expiring between 2018 and 2024.
Currently a small number of office units representing less than 2% of rental income are vacant which
lends itself to further upside once occupied.
SALIENT TERMS OF THE TRANSACTION
The net purchase consideration (excluding transaction related costs) for the Transaction is GBP
14,911,100 being GBP 15,430,000 less GBP 518,900 representing the principal rent which would have
been payable pursuant to the leases but for the unexpired rent free, concessionary or discounted rent
period in these occupational leases (the “Net Purchase Consideration”). The Net Purchase
Consideration and transaction related costs will be settled through a combination of cash and debt
funding. It is however intended that additional equity could be raised at an appropriate time in the future
to replenish Atlantic Leaf’s cash reserves used to fund this acquisition.
All conditions precedent relating to the Transaction have been completed. The Seller has provided
normal warranties and indemnities for a transaction of this nature.
DETAILS OF THE PROPERTY
Key information regarding the Property is set out below:
Property location Knowsley, United Kingdom
Property valuation GBP 15,430,000 (before adjusting for rent compensation)
Sector Industrial (80% by floor area) and Multi-let industrial and
Office (20% by floor area)
Key Tenants B&M Retail Limited, Serco Limited
Rentable area 574,078ft2 (53,114m²)
Rental (p.a.) GBP 1,405,538
Rental per square metre GBP 26.46
Rental per square foot GBP 2.45
Weighted average lease expiry (years) 3.6
Valuation net initial yield 8.5%
Estimated transaction related costs GBP 910,000
The transaction costs largely comprise of stamp duty land tax payable in the United Kingdom of
approximately GBP 745,000. The value attributed to the Property is considered to be the fair market
value, as determined by the board of directors of Atlantic Leaf (“the Board”). The Board is not
independent and its members are not registered as professional valuers or as professional associate
valuers in terms of the Property Valuers Profession Act, No 47 of 2000.
FINANCIAL INFORMATION
Set out below is the financial forecast of Atlantic Leaf’s acquisition of the Property (the “forecast”) for
the eleven and a half months ending 28 February 2019 and the year ending 28 February 2020 (the
“forecast period”).
The forecast has been prepared on the basis that the effective date of the Transaction was 23 March
2018 and that it includes forecast results for the duration of the forecast period.
The forecast, including the assumptions on which it is based and the financial information from which
it has been prepared, is the responsibility of the directors of the Company. The forecast has not been
reviewed or reported on by independent reporting accountants or auditors.
The forecast presented in the table below has been prepared in accordance with the Company’s
accounting policies, which are in compliance with International Financial Reporting Standards; and
represent only the forecast income from the Transaction.
Forecast for the Forecast for the
11 ½ months year
ending ending
28-Feb-19 28-Feb-20
GBP GBP
Property net rental 1 198 429 1 279 025
Other operating expenses (excluding transaction costs) (112 382) (119 940)
Operational net income 1 086 047 1 159 085
Financing costs (242 992) (259 333)
Profit before taxation 843 055 899 752
Taxation (110 780) (118 230)
Profit for the period 732 275 781 522
Distributable earnings 732 275 781 522
The forecast incorporates the following material assumptions in respect of revenue and expenses:
1. Rental income comprises contracted revenue based on existing lease agreements including
stipulated increases, all of which are valid and enforceable. It has been assumed for a number of
minor leases that expire during the forecast period that these will be renewed by the existing tenants
on the same terms. Near-contracted revenue is immaterial and is not separately disclosed. There is
no uncontracted revenue. It is also assumed that there will be no unforeseen economic factors that
will affect the lessees’ ability to meet their commitments in terms of existing lease agreements.
2. Property net rental has been calculated by straight lining the net rent due from the tenants over the
remaining period of the leases and takes into account the rent-free periods originally granted by
the Seller.
3. Financing costs include senior debt that will be drawn down on the date of the Transaction at an
amount equal to approximately 55% of the Property value with a cost of debt of approximately
2.72% p.a (Libor plus 1.70% plus amortised finance costs).
4. Other operating expenses include expenditure which has been forecast by management on a line-
by-line basis based on management’s expectations.
5. The Property is recognised at cost being the Net Purchase Consideration and it is assumed that no
impairment is recognised.
CATEGORISATION OF THE TRANSACTION
The Transaction is classified as a category 2 transaction in terms of paragraph 9.5(a) of the JSE Listings
Requirements and accordingly does not require approval by Atlantic Leaf’s shareholders. The
Transaction constitutes an undertaking in the ordinary course of business of Atlantic Leaf and therefore
does not fall under the scope of Chapter 13 of the Listing Rules of the Stock Exchange of Mauritius Ltd
(“SEM”).
Atlantic Leaf holds dual primary listings on both the Official Market of the SEM and the Main Board
of the JSE.
By order of the Board
26 March 2018
For further information please contact:
South African JSE Sponsor
Java Capital +27 11 722 3050
Corporate secretary
Intercontinental Trust Limited +230 403 0800
SEM authorised representative and Sponsor
Perigeum Capital Ltd +230 402 0890
This notice is issued pursuant to the JSE Listings Requirements, SEM Listing Rule 11.3 and the
Mauritian Securities Act 2005. The Board of Atlantic Leaf accepts full responsibility for the accuracy
of the information contained in this announcement.
Date: 26/03/2018 11:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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