Disposal of share in iQ JV to Wellcome Trust

RNS Number : 3098H

Quintain Estates & Development PLC

16 May 2014

 



 16 May 2014

Quintain Estates & Development PLC

("Quintain" / "Company" / "Group")

Quintain disposes of its share in iQ student accommodation joint venture to Wellcome Trust for £106.4 million

London investment and development specialist, Quintain, announces the disposal of its 50% interest in the iQ student accommodation joint venture ("iQ") to its partner, Wellcome Trust for £106.4 million. The consideration, which was paid in cash, is in line with the 31 March 2014 valuation and unlocks the Company's entire investment in the vehicle.

Since realising its investment in Greenwich Peninsula last November, Quintain has begun to recycle capital into its major development at Wembley Park and broaden its London asset base through the recently announced acquisitions of Kingsbourne House and Aldermary House. The disposal of its interest in iQ enables Quintain to invest incremental capital in income-producing assets and to deliver more homes, more quickly at Wembley Park, whilst maintaining levels of debt appropriate to the wider portfolio. It also improves management's ability to concentrate its attention on opportunities within the Company's stated geographical focus of London.

Having established iQ in 2006, Quintain introduced Wellcome Trust as a 50:50 joint venture partner in 2007, each partner committing up to £100 million of equity. Quintain has also acted as asset manager to the joint venture since this date. Over the last seven years, the joint venture has grown to become one of the UK's largest and most successful operators of purpose built student accommodation, achieving an average 99% occupancy rate over the last three years.

iQ now owns a portfolio of 5,183 bedrooms across 13 properties located in nine UK cities, with a gross property value at 31 March 2014 of £431.9 million, reflecting a valuation yield of 6.1%. Quintain's net investment in iQ at 30 September 2013 was £104.1 million, with an historic cost of £87.8 million. Its share of iQ's profit after tax, which includes valuation and mark to market movements of £9.1 million, was £14.3 million for the year ended 31 March 2013. Excluding valuation and mark to market movements, iQ contributed £5.2 million to Quintain's underlying profit for the year ended 31 March 2013 and £2.6 million for the six months to 31 September 2013.

On a pro forma basis, reflecting capital expenditure and transactional activity since Quintain's interim results for the six months ended 30 September 2013, released on 27 November 2013, and this transaction, Quintain's net debt will fall to approximately £140 million, although this is expected to rise again as proceeds are re-invested. In addition to reducing net debt, the sale will reduce Quintain's finance expenses and overheads and remove its share of joint venture operational costs.

Additionally, Quintain will receive £300,000 of fee income from iQ over the next two years in return for certain transitional services. Seven members of the iQ team currently directly employed by Quintain transfer to iQ as part of this transaction, including iQ Fund Manager, Ian Scott, and Head of iQ Operations, David Tymms.

Maxwell James, Chief Executive of Quintain, commented:

"In the seven years since we established the joint venture with Wellcome Trust, we have built iQ into a highly respected, market-leading business that has delivered strong returns.

"With the future of Quintain firmly fixed on London and iQ achieving strong results across the UK, it is the right time to unlock our substantial investment and recycle it into opportunities aligned to our growth strategy. Specifically, we are increasing the pace of residential delivery at Wembley Park, including an investment in PRS accommodation, and acquiring assets that offer the potential for income and capital growth in London.

"It has been a pleasure working with the team at Wellcome Trust and we look forward to watching the continued success of iQ as it enters a new era. I would also like to sincerely thank the iQ team for their considerable contribution to Quintain and wish them every success as they embark on this new chapter."

Peter Pereira Gray, Managing Director, Investment Division at Wellcome Trust commented:

"Taking full ownership of iQ is a demonstration of our commitment to the UK student accommodation sector and our confidence in iQ as a platform.  We plan to invest additional capital to fund the next phase of iQ's growth and look forward to continued success and growth for iQ under our sole ownership.

"We would like to thank our partners Quintain and the iQ management team for making iQ such a successful investment for Wellcome Trust to date."

ENDS - -

Enquiries:

Quintain Estates & Development PLC Maxwell James / Richard Stearn Cressida Curtis         Tel: [phone]

RLM Finsbury Group Jenny Davey Charlotte Whitley Tel: [phone]

Forward looking statements

This announcement is for information purposes only and contains certain forward-looking statements which, by their nature, involve risk and uncertainty because they relate to or depend upon future events and circumstances.

There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward looking statements, including a number of factors outside Quintain's control. All forward-looking statements are based upon information known to Quintain on the date of this announcement and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Quintain gives no undertaking to update forward-looking statements whether as a result of new information, future events or otherwise. Information contained in this announcement relating to the Company should not be relied upon as an indicator of future performance.

 

END

 

 

DISAFMATMBIBMLI