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Trading statements

KWE on track to deliver significant dividend improvement

05 May 2016 08:07

Kennedy Wilson Europe Real Estate says it remains on track to deliver the significant dividend improvement announced at its full year results and confirmed that it had completed acquisitions in Dublin and Manchester.

KWE's first quarter business update says the total portfolio value stands at GBP2,773.0 million across 287 properties including two loan portfolios generating annualised NOI of GBP152.9 million.

Other highlights:

- Property portfolio occupancy of 95.8% with WAULT of 7.3 years (9.3 to expiry)

Asset management contracted on £0.6 million of incremental annualised NOI in the Period, primarily from commercial lease transactions

- Group net debt of £1,074.9 million with a weighted average interest rate of 2.8%, a weighted average term to maturity of 6.2 years and an LTV of 38.8%

- Acquisitions of £19.1 million completed in the Period with a further £143.5 million of acquisitions completed post Period end, reflecting an overall blended yield on cost of 5.8% on 2016 acquisitions and a portfolio value1 of £2,920.6 million

- Remain on track to deliver £300 million of disposals by June 2016 - sales of £143.9 million completed in the Period taking total disposals at Period end to £268.5 million

- Tapped KWE's 2025 €400 million unsecured bonds by a further €150 million (£118.6 million), increasing the bonds to a benchmark size of €550 million

- Quarterly interim dividend remains at 12.0 pence per share, on track to deliver an annualised 48.0 pence per share for 2016

Chairman Charlotte Valeur said: "KWE remains on track to deliver the significant dividend improvement announced at its full year results. The Board is pleased to announce a further 12.0 pence per share to be paid in Q2-16, moving towards the 48.0 pence per share annualised target for 2016, a 37% increase over 2015 and reflecting an attractive prospective dividend yield of 4.5%. An important milestone was also achieved with credit investors, as KWE recently tapped its 2025 unsecured Euro bonds by a further €150 million, improving the liquidity of the bonds by increasing the series to a benchmark size."

Separately, KWE announced that it had completed the acquisition of Towers Business Park, South Manchester, and two suburban office assets in Sandyford and Blackrock in South Dublin.

Towers Business Park was acquired from Lone Star, for GBP82 million, reflecting a topped-up yield on cost of 6.7%. The acquisition will be funded from the Company's existing cash resources.

Towers Business Park comprises ten prime suburban offices totalling 289,100 sq ft located in South Manchester, providing fast and convenient connectivity to Manchester City Centre and Airport. The offices are let to 21 high quality corporate occupiers, including John Lewis, British Airways, Honeywell, Oracle, Syngenta and Cisco. The top ten tenants represent 86% of topped up rental income and have been in occupation on average in excess of nine years.

The portfolio is 96% let and the majority of leases benefit from five-yearly upward-only rent reviews and a WAULT of 5.0 years (6.5 years to expiry).

The two suburban office assets in Sandyford and Blackrock were acquired for an aggregate consideration of EUR76.9 million (£60.8 million). The acquisitions will be funded from the Company's existing cash resources.

KWE completed the acquisition of the Chase, Sandyford, Dublin 18 for €62.5 million (£49.4 million) from Chase Arkle plc. The purchase price reflects a yield on cost of 4.0%, with the building only 68% occupied.

The Chase, one of the top suburban office properties in South Dublin, was completed in 2009. It occupies 175,600 sq ft of space, has 242 car parking spaces and is within 20 minutes of the city centre via the nearby Luas (tram) system. It is five minutes' drive to the M50 (Dublin's main orbital road) with excellent connectivity to all major motorways and the airport.

The acquisition capital value psf is €356 with average in-place rents of €19 psf, which compare favourably to current ERV and provide significant reversion. The WAULT is 3.4 years (10.1 years to expiry).

KWE also completed the acquisition of three office buildings at Blackrock Business Park, Co. Dublin in March 2016, for €14.4 million (£11.4 million) from Hudson Advisors which took control of the properties in 2014 via a loan acquisition. The purchase price reflects a yield on cost of 6.8% and a capital value psf of €285. The properties were completed in 2007 (comprising 50,500 sq ft of space and 85 car parking spaces) and are in close proximity to the Blackrock DART station, providing convenient access to the city centre. The properties are multi-let, with occupancy at 98.5% and with a WAULT of 5.2 years (8.3 years to expiry).

At 8:07am: (LON:KWE) Kennedy Wilson Europe Real Estate Plc share price was +4.5p at 1081.5p

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