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Law360 (March 19, 2020, 4:04 PM EDT) -- RDI REIT has sold a three-property retail warehouse portfolio in Germany and a separate office building in the country for combined proceeds of £35.83 million ($41.68 million), according to an announcement Thursday from the U.K.-based real estate investment trust, which also told investors it's too early to tell how COVID-19 will affect earnings.
RDI REIT PLC and joint venture partners sold the retail warehouse portfolio for €34.2 million ($36.5 million) and said its share of proceeds from that sale were €22.8 million, and the company also sold an office building in Reigate for £14.9 million.
The REIT did not disclose buy-side information in its Thursday announcement.
"These latest disposals are in line with RDI's stated strategy to further reduce its exposure to retail and focus the portfolio on core assets in the U.K. market whilst strengthening the balance sheet," Mike Watters, CEO at RDI, said in a statement. "We are pleased with progress made to date in addition to our active sales pipeline although remain cognizant of the unprecedented macro-economic backdrop that has emerged."
The retail portfolio comprises warehouses in Herzogenrath, Schwandorf and Huckelhoven. RDI REIT had owned a 75% stake in the properties in Herzogenrath and Schwandorf, and an unnamed joint venture partner had held one-quarter of those.
RDI REIT had owned the Huckelhoven property via a joint venture with Israel-based insurance and financial firm Menora Mivtachim, which couldn't be immediately reached for comment Thursday.
Home improvement retail giant OBI leases space at the three properties, and income from that tenant accounts for 89.5% of total rental income at the three warehouses, RDI said Thursday.
The REIT said that portfolio sale price was at a 3.5% discount to market values as of August 31, 2019, but noted that the buyer "has taken on the inherent tax liabilities associated with the portfolio." Average remaining lease length is 4.7 years at the portfolio, the company said Thursday.
The Reigate building, meanwhile, has 62,756 square feet of space. The property, known as the Omnibus building, is 55.1% occupied, and the sale price worked out to a 6.3% discount on market value as of August 31, 2019, the REIT said Thursday.
RDI also provided an update on COVID-19 on Thursday, saying it's too early to predict the impact of the virus on the REIT's earnings given the continued uncertainty of the situation.
"The company has also been made aware of likely enforced retail store closures in Germany for all but essential retailers such as food stores and chemists," the REIT said in a statement. "Should this come into effect, our shopping centres and other retail assets will remain open to support these essential retailers. However, overall footfall and trading are expected to be impacted by the anticipated store closures of units occupied by discretionary retailers."
Counsel information for the sales was not immediately available Thursday.
--Editing by Gemma Horowitz.
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