Lords Group Agrees Sale And Leaseback Of Four Properties

Lords, a leading distributor of building materials in the UK, announces that it has exchanged binding agreements with Gempoint 2000 Limited for the sale and leaseback by the Group of four of Lords’ freehold properties (the ‘Properties’) for an aggregate cash consideration on disposal of £13.1 million (the ‘Sale’). The Properties, all within the Merchanting division, are locations from which the Group’s businesses operate in Tamworth, Dewsbury, Luton and Ilkeston and will be leased back to the Group on fifteen-year leases (the ‘Leaseback’ and together with the ‘Sale’, the ‘Transaction’).

The net proceeds from the Sale will be applied towards reducing Group borrowings, and in doing so will provide additional liquidity headroom capable of supporting the Group’s organic growth strategy as well as selective acquisitive growth opportunities in the future.

Pursuant to the Leaseback, the aggregate initial rent across the Properties will be £917,082 per annum and the rent on each property will be subject to five yearly upward only rent review at the higher of RPI (of not less than 1% and capped at 4%) compounded annually.

Following the Sale proceeds being applied to reducing Group’s borrowings, the ongoing cash flow impact of the Transaction is expected to be broadly neutral as the additional rent payable will be offset by reduced interest payments. The balance sheet will be impacted in the current year by a right of use asset of approximately £4.4 million and an IFRS 16 lease liability of £9.0 million. At 31 December 2024, the Properties had an unaudited aggregate book value of £6.5 million and a property gain of approximately £2.0 million is expected to result from the Transaction.

The Transaction follows a competitive marketing process using a property agent, Knight Frank, and the Board has considered alternative offers received from independent third parties.

Shanker Patel, the Group’s CEO, is majority owner and a director of Gempoint 2000 Limited. As a result, Gempoint 2000 Limited is a related party of the Company, and the Transaction is therefore a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies.

The independent directors of the Company (being Gary O’Brien, Stuart Kilpatrick, Sheena Mackay and Andrew Harrison) consider, having consulted with Lords’ nominated adviser, that the terms of the Transaction are fair and reasonable insofar as the Company’s shareholders are concerned.

Commenting on the transaction, Stuart Kilpatrick, Chief Financial Officer of Lords, said:
"We are pleased to announce this transaction which will not only significantly enhance the Group’s balance sheet but also support our strategy of scaling the business through organic growth, as evidenced by the recent branch openings in Maidstone, Mansfield and Bicester, as well as through selective acquisition opportunities that exist in the fragmented markets in which we operate.”

Source : Lords Group Trading plc

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