QinetiQ agrees sale-and-leaseback of Farnborough site

QinetiQ Group announced the sale of its 407-acre freehold site at Cody Technology Park (CTP) in Farnborough on Monday, to a fund managed by Tristan Capital Partners, for £112m.

The FTSE 250 company said the deal was expected to complete within eight weeks, at which point it would receive a cash payment of £112m and enter into a 15-year leaseback agreement for its current footprint at the site.

It said the transaction was expected to reduce its net debt by about £65m, with a negligible impact on underlying operating profit and cash flow due to the loss of rental income from other tenants at the park.

While QinetiQ previously managed and maintained the entire site, it would now continue to occupy about a third of the space under the leaseback arrangement, with the remainder of the site housing 96 other tenants, vacant spaces, and common areas.

Under IFRS 16 accounting standards, QinetiQ anticipated recognising a one-off, non-cash accounting loss of around £30m on completion.

“I'm delighted we have found a strategic partner committed to investing in Cody Technology Park and developing its long-term future as a centre of excellence in defence, science and technology in Hampshire,” said group chief executive officer Steve Wadey.

“The sale of the site to Tristan Capital Partners is aligned to our strategic priorities and underscores our commitment to focusing on our core business to deliver for our customers.”

Wadey said the company remained “fully committed to Farnborough” as the location of its group headquarters and a major science and technology centre in the UK, and would become the principal tenant on the site.

“This deal will result in the launch of a programme of investment by Tristan Capital Partners to further develop and modernise the technology park for all current and future tenants, whilst allowing us to invest in the development of the company consistent with our enhanced focus on capital allocation.”

Reporting by Josh White for Sharecast.com.