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Game Digital sells UK head office and distribution centre

£13.5 million deal involves an immediate leaseback, so the retailer will rent the premises from now on

Game Digital has sold its distribution centre and head office buildings for £13.5 million, but it will continue to run its operations from the site as part of a leaseback agreement.

The buildings, which are located in Basingstoke, were sold to Portsmouth Estates Developments in a deal that is expected to close on October 7. However, Game Digital's day-to-day won't change at all, thanks to an "immediate leaseback."

In a statement released today, the retail company confirmed that it, "will continue to operate its principal UK business activities from its Basingstoke head office and continue to use its distribution centre as its primary UK store and online storage and fulfilment centre."

The benefit of the deal will be seen on the Game Digital's balance sheet at the end of the financial year. The company said that the buildings are valued at £7 million, so the deal will yield an "exceptional gain" of £6.2 million, minus transaction costs of £300,000.

The 17-year lease on Game Digital's distribution centre and head office will cost £1.06 million per year. The rent will be reviewed ("upward only") every five years.

The fact that this sale arrives in the midst of lean times for Game Digital cannot be ignored. In December last year, the company warned its investors about a weak holiday season in the UK, leading down to a 39% slump in its stock price.

"We are committed to taking appropriate actions to respond to the market challenges that we face in the UK market," CEO Martyn Gibbs said at the time. Gibbs pointed to the launch of VR headsets as an opportunity for the company, on the grounds that the technology required, "expert advice and specialist service." That statement immediately preceded the company's annual general meeting; David Hamid, the chairman of the board, announced his resignation this month and that will take effect at the next AGM. Hamid is to be replaced by John Jackson.

In the first half of the fiscal year, Game Digital reported a 28.8% year-on-year decline in net profit, and a 3.3% decline in gross profit.

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Matthew Handrahan

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Matthew Handrahan joined GamesIndustry in 2011, bringing long-form feature-writing experience to the team as well as a deep understanding of the video game development business. He previously spent more than five years at award-winning magazine gamesTM.

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