Building materials distributor sells four properties in £13m deal

Building materials distributor Lords has agreed to sell four of its freehold properties in a £13.1m sale and leaseback deal with Gempoint 2000.

The properties, all part of the company’s merchandising division, are located in Tamworth, Dewsbury, Luton, and Ilkeston, and are sites from which the Group’s businesses operate.

Under the terms of the transaction, the properties will be leased back to Lords on 15-year agreements, allowing operations to continue without disruption.

As the buyer, Gempoint 2000, is majority owned by Lord’s CEO Shanker Patel, the transaction is classified as a related party deal.

Proceeds from the sale will be used to reduce company debt, a move Lords says will “enhance financial flexibility and support both organic and acquisitive growth.”

Annual rent under the new leases will total just over £917,000, with rent reviews every five years tied to inflation, subject to minimum and maximum thresholds.

While the company will take on new rental costs, the overall cash flow impact is expected to be broadly neutral, as reduced interest payments will help offset the new lease obligations.

Lords also anticipates a property gain of around £2m, given the assets’ combined book value of £6.5m.

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.”