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ARC Global Trust II Buys 7-Building UK Portfolio for $152 Million

American Realty Capital Global Trust II Inc., a publicly registered non-traded real estate investment trust sponsored by AR Capital, acquired an office portfolio in the English town of Reading from 4 Charity Foundation for $152.1 million, exclusive of closing costs.

The portfolio consists of seven office buildings comprised of approximately 365,832 rentable square feet. The properties are located in Shinfield Park, two miles south of the Reading city center, the largest city in Berkshire. The Reading region hosts several offices for multinational companies, including: Oracle, Microsoft, Hewlett-Packard, Compaq, Vodafone, Cisco and PepsiCo. It is located in close proximity to central London, as well as Heathrow and Gatwick airports. The portfolio is 100 percent master-leased to Foster Wheeler Energy Limited, a subsidiary of Foster Wheeler AG, a global engineering conglomerate.

The master lease commenced in August 1999, has a 25-year term and expires in August 2024, with two 10-year renewal options. The lease contains fixed 2.5 percent per annum compounded rental escalations every five years, with the next scheduled to occur in April 2019. The lease is triple-net, and the tenant is required to pay all operating expenses in addition to the base rent. The annualized rental income is approximately $12.1 million.

American Realty Capital Global Trust II funded the acquisition with available cash-on-hand from its ongoing initial public offering and two loans totaling $76.1 million from the Royal Bank of Scotland.

The Tranche A loan totals $60.8 million and bears an interest rate of 1.6 percent plus 3-month LIBOR per annum, which has been fixed to 1.0 percent through an interest rate swap. The principal outstanding is due on October 21, 2018.

The Tranche B Loan totals $15.2 million and bears an interest rate of 1.6 percent plus 3-month LIBOR per annum. The principal outstanding is due on October 21, 2016.

American Realty Capital Global Trust II seeks to acquire a portfolio of single tenant net leased commercial real estate properties, investing 50 percent of its capital in the U.S. and 50 percent in Europe. The company commenced its $3.125 billion initial public offering in August 2014, and as of June 30, 2015, had received $226.4 million gross proceeds from investors at $25 per share.