Norcros agrees £6.5m property sell-off
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BATHROOM accessories and tile manufacturer Norcros is to sell off part of its property portfolio in a deal worth £6.5m.
Wilmslow-based Norcros, which owns the Triton showers and Johnson Tiles brands, said it had struck an agreement with Clowes Developments (UK) of Ashbourne, Derbyshire, that would see it acquire its entire portfolio of surplus legacy freehold properties.
Contracts have been exchanged and a 10% non-refundable deposit paid. Completion will be on March 2 at which time the remaining balance will be paid in cash.
The property portfolio comprises: three sites in Tunstall, Staffordshire; the surplus property at Orgreave Drive, Sheffield; and two properties in Boston, Lincolnshire which are currently let to early 2018.
Norcros said an exceptional charge of £1.5m relating to the deal would be made in the results for the year to March 31, 2015, covering loss on disposal and transaction fees. The book value of the properties being disposed of is £7.6m.
Annualised underlying operating profit will be adversely impacted by £200,000, being the loss of rental income from the Boston sites, net of holding costs of the other surplus freehold properties. Norcros will use the proceeds of the sale to pay down debt and provide additional growth funding.
Chief executive Nick Kelsall said: “I am delighted with this transaction as it is a significant step forward for the group, an elegant solution to our surplus legacy freeholds and a very positive outcome for shareholders and management. It ends a long chapter in the group’s property history in one transaction, and realises significant cash.”
Norcros said the deal left two outstanding legacy property issues. The first involves a claim for compensation for breach of contract with a subsidiary of supermarket group Morrisons relating to the Highgate site in Tunstall. This is still being pursued.
Secondly, one legacy surplus lease remains at Groundwell, Swindon. The head lease runs to 2022 and the site is currently sub-let to Network Rail through to December 2018 at a net cost of £200,000 per annum to Norcros.