Merlin lease agreements to extend portfolio WAULT
30 December 2021
Secure Income REIT Plc
("the Company", "SIR")
Merlin lease agreements to extend SIR portfolio WAULT to 30 years
The Board of Secure Income REIT plc announces that in return for a cash payment of £33.45 million to Merlin Entertainments Limited ("Merlin") to be paid from the Company's cash resources (the "Capital Contribution"), Merlin has agreed it will extend the lease terms in respect of Alton Towers, Thorpe Park, Warwick Castle and Heide Park, Germany by 35 years, from 20.5 years currently, to 55.5 years without break from today.
Rental payments under the leases will remain unchanged, however annual rent reviews of the UK assets, comprising Alton Towers, Thorpe Park and Warwick Castle, will change from uncapped annual upwards only RPI uplifts to annual reviews of CPI +0.5% (with a floor of 1% per annum and a maximum increase of 4% per annum). The Heide Park, Germany lease will continue to have fixed reviews increasing annually at 3.34% for the full 55.5 year term.
All of the leases have also been updated to formalise the existing close co-operation between SIR and Merlin in relation to ESG, in particular the reporting and management of environmental matters.
CBRE, SIR's independent external valuer, has confirmed that the Capital Contribution paid represents not more than 50% of any marriage value created as a result of the lease extensions. A formal independent valuation will be provided, along with the entire portfolio valuation as usual, when the Company reports its full year results in early March 2022.
Commenting upon the transaction SIR Chairman Martin Moore said:
"This is a very meaningful deal for our business, resulting as it does in the weighted average unexpired lease term across the SIR portfolio increasing from 19.2 years to 30.0 years, making our WAULT the longest amongst our peers in the UK REIT sector.
"Merlin is a genuinely world class business which, through this initiative and particularly the new ESG elements incorporated in the agreements, has demonstrated its clear commitment to these unique, landmark sites."
For further information, please contact:
Secure Income REIT Plc
+44 20 7647 7647
Stifel Nicolaus Europe Limited
(Nominated Adviser to SIR)
+44 20 7710 7600
(PR Adviser to SIR)
+44 20 3727 1000
About Merlin Entertainments Limited:
Merlin operates Europe's largest visitor attractions business and the second largest in the World after Disney. Its parent company guarantees all the tenant's commitments in SIR's leases. Revenues from Q3 trading at its Resorts Theme Park segment (in which all SIR's assets sit) were ahead of pre-pandemic trading in Q3 2019.
The company's principal shareholders are Kirkbi, the investment arm of owners of LEGO, the worlds' most profitable toy company, Blackstone Core Private Equity and CPPIB, Canada's largest pension fund.
About Secure Income REIT Plc:
Secure Income REIT Plc ("SIR") is a diversified UK REIT, investing in institutional real estate assets that provide long term rental income with upwards only inflation protection.
The Company's robust balance sheet, strong liquidity and experienced Management Team enabled it to pay quarterly dividends throughout the pandemic without interruption and, over seven years since listing, delivered a Total Accounting Return of 15.0% p.a. and a Total Shareholder Return of 15.6% p.a..
The Company, as at 30 June 2021, has £2.0 billion of gross property assets, £1.3 billion of net assets, £184 million of uncommitted and unfettered cash, structurally secure non-recourse debt, and difficult to replicate very long leases on Key Operating Assets in defensive sectors. The Management Team is strongly aligned with shareholders through its 12.4% interest in the business.
The Company is a UK REIT which floated on the AIM market of the London Stock Exchange in June 2014.
The Company's LEI is 213800M1VI451RU17H40
Further information on Secure Income REIT is available at www.SecureIncomeREIT.co.uk.
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. The person responsible for making this announcement on behalf of the Company is Sandy Gumm, Non-Executive Director and Chief Operating Officer of Prestbury Investment Partners Limited.