Tuffnells Parcel Express has secured a £5.17 million sale and leaseback deal with Campus Overseas Corp for two warehouses in Belvedere, Kent and Carnforth in Lancashire.
In September Tuffnells parent company parent Connect Group exchanged contracts for the sale of six Tuffnells distribution depots with Urban Logistics Prop Co 1 as part of a proposed sale and leaseback strategy which raised £9.9 million.
The Belevedere property was sold for £4.8 million and will be leased on a 10 year deal at a rent of £245,083 a year.
Connect Group has 78 distribution depots nationwide through Tuffnells Parcels Express and Smiths News.
Tuffnells operates its business from a network of 37 local collection and delivery distribution depots that were acquired as part of the acquisition of the Tuffnells business in December 2014.
The sale and leaseback will seek to further align the Tuffnells real estate portfolio with the Group’s other real estate interests (which are predominantly leasehold).
The Board intends to use the cash proceeds arising from the sale and leaseback of the Tuffnells Sale Portfolio No. 2 to reduce the Group’s net debt.
Tony Grace, Chief Financial Officer of Connect Group, commented on the transaction: “The sale and leaseback of this second tranche of properties is another step in our strategic plan and ambition to reduce the Group’s net debt position to a targeted net debt/EBITDA ratio of 1x by FY2021 as announced on 22 January 2019. We are pleased to be able to report that we have now exchanged contracts on a further two Tuffnells properties. We look forward to formally completing on each of these properties in due course and, furthermore, exploring other possible sale and leaseback opportunities for the remaining Tuffnells freehold real estate portfolio, where those opportunities meet the Board’s expectations in respect of value, economic return and timings.”
The first tranche of properties have been leased back on 20-year leases with the net rents payable under the leases, which will be at market standard rents, will be an aggregate of approx. £0.7 million (plus VAT) per annum.
The six properties comprising the Tuffnells Sale Portfolio No. 1 are located in local industrial estates within Andover, Coventry, Leighton Buzzard, Newport, Perth and Plymouth.