Raven Russia Ltd. (LON:RUS) has announced a second significant acquisition for the current year, a large, modern Grade A warehouse complex north of Moscow. The acquisition (maximum consideration c $120m) is initially funded from Raven’s existing strong cash position and immediately enhances earnings with the potential for further upside from lettings and higher rents. With the Russian economy continuing to improve, and occupier demand running well in excess of falling new warehouse supply, management comments that it feels increasingly like the bottom of the market. The company remains well positioned for additional accretive acquisitions.
Accretive expansion
With c 195ksqm of lettable space, constructed in stages over 2014-17, the agreed acquisition adds another large, modern warehouse facility to Raven’s portfolio. It is being acquired at below replacement cost and at the current 73% occupancy has annualised income of RUB616m ($10.4m). It immediately enhances our fully diluted adjusted EPS by c 8% on a full-year basis. Completion is expected in early December. The consideration includes an initial payment of c $87m with deferred consideration, dependent on letting progress, taking the total to c $112-120m. The full occupancy yield is 11.38% and the reversionary yield is 12.51%.
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