Raven Russia buys Moscow logistics park in £66m cash deal

The London-listed firm said the agreement provides for the subsidiary to acquire a completed warehouse complex from Industrialniy park Sever, a company incorporated in Russia.

Initial consideration of RUR 5.12bn (£66.26m) was payable, with a further deferred element of consideration due within 18 months of completion, dependent on the letting of vacant space.

The board said the deferred consideration payable was estimated to be between RUR 1.51bn and RUR 1.97bn, with all consideration satisfied in cash.

Raven Russia said the yield on the maximum consideration payable was expected to be 11.38%, with a reversionary yield of 12.51%.

The purchase price represented a capital value of approximately RUR 36,000 per square metre, which was at or below replacement cost.

According to the board, the agreement remained conditional on the satisfaction of certain escrow arrangements, and the acquisition was expected to complete in early December.

The property reportedly comprises a grade A warehouse complex of 195,132 square metres situated to the north of Moscow, approximately 2km from the new Moscow to Saint-Petersburg toll road.

It was built between 2014 and 2017, and was 73% let to a number of local and international tenants, including OBI, O'KEY retail group, Major Logistics, Miratorg and R-Pharm.

Leases were rouble-denominated, and current annualised income was RUR 616m, rising to RUR 886m on a fully let ERV basis.

The current unexpired weighted average lease term was four years.

“We are pleased to announce our second acquisition of the year at a point which is increasingly feeling like the bottom of the cycle,” said Raven Russia CEO Glyn Hirsch.

“ERV yields of 12+% and capital values at or below replacement cost represent excellent investment opportunities.

“In sterling, rents are now £4.60 per square foot and capital values £43 per square foot.”

Hirsch said the company had commenced discussions on investment debt finance on the deal, which should result in a “high return” on the equity it ultimately invests.

“The Russian central bank's further cut in rates last week to 8.25% should also help sentiment.

“Hopefully we will have more of the same - or better - to come.”