Secure Income (SIR), the retail estate investment trust (Reit) managed by property tycoon Nick Leslau’s Prestbury Investments, has bought Manchester Arena, the venue subject to a bomb attack after an Ariane Grande concert 10 months ago.
The purchase is part of a £436 million acquisition of two property portfolios that will increase the £853 million Reit by a third and which the company hopes will strengthen its investment proposition.
The first, a portfolio of UK leisure assets has been bought for £224 million and a net initial yield of 5.9% from investment group Mansford. It includes the eight-acre site encompassing the Manchester Arena, where 23 people died, including the bomber, last May. The venue is operated by US entertainment group SMG.
It also includes the Brewery conference centre in London’s Chiswell Street, 17 hotels let to Travelodge and 18 Stonegate freehold pubs.
The second portfolio is another group of 59 hotels let to Travelodge sold by a consortium including Goldman Sachs investment bank. Secure Income has paid £212 million on a net initial yield of 6.1%.
The portfolios have weighted average unexpired leases of 18 years and 23.5 years respectively which Secure Income says will enhance the long-term inflation protection to its investors.
Secure Income, which specialises in leisure properties with long-term leases such as Alton Towers, has sounded out its institutional investors about a £315.5 million share placing to help fund the deal. Its big backers include fund managers Artemis, Invesco and Troy.
The company says the acquisitions will strengthen its balance sheet by lowering the proportion of its debts with net loan to value (LTV) reducing to 45.8% from 49.6%.
It should also boost dividends with the placing shares issued at 365p expected to yield 4.1%.
Shareholders will be asked to vote on the placing, which will increase the shares in issue by nearly 37% and dilute the position of investors not taking part in the fund raising, at a general meeting on 27 March.
The announcement came as AIM-listed Secure Income announced annual results showing a 14.5% increase in net asset value per share last year, as measured by the EPRA industry standard. EPRA earnings per share rose 20.4% to 13.6p.
Secure Income shares firmed a penny to 371p. They have risen 63% since its flotation in June 2014 and generated an average annual shareholder return of 12.3% over three years, according to Morningstar.
Leslau (pictured above right at a charity gala in 2012) is the chairman of Prestbury. A veteran of property development he is reported to have made over £300 million in his career. He first shot to prominence in the 1980s as chief executive of Burford, after going into business with investor Nigel Wray.