Custodian REIT (LSE: CREI), the UK property investment company, is pleased to announce a property purchase.
The Company has acquired a 86,922 sq ft industrial facility in Grangemouth, adjacent to the M9. The unit is let Thornbridge Sawmills for a further 18 years.
The unit has a passing rent of £388,261 per annum, with a reversion in September 2023, linked to RPI, which is expected to reflect a net reversionary yield1 of 5.5%.
The agreed purchase price of £7.49 million was funded from the Company’s existing debt facilities, resulting in net gearing2 increasing to 20.9% loan to value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company’s discretionary investment manager), said:
“We are delighted to have secured this property which benefits from excellent links to both Glasgow and Edinburgh but importantly for the tenant, which imports timber, is in close proximity to Scotland’s largest container port. The relatively low risk, long term lease to a strong tenant is further enhanced by rent reviews linked to RPI, capped and collared at a maximum of 3% and minimum 1% per annum, providing a degree of inflation protection. The first rent review is due in September 2023 and five-yearly thereafter.”
1 Reversionary rent divided by purchase price plus assumed purchasers’ costs.
2 Gross borrowings less cash (excluding tenant rental deposits and retentions) divided by last published property portfolio valuation.
