Custodian REIT (LSE: CREI), the UK property investment company focused on smaller lot-sizes, is pleased to announce a further property purchase.
The Company has acquired a 70,160 sq ft retail park in Nottingham consisting of four units occupied by Wickes, Matalan, Poundland and KFC, with nearby retailers including Tesco, Morrisons, Lidl and McDonald’s.
The units have a weighted average unexpired term to first break or expiry of 9.0 years with an aggregate passing rent of £994,050 per annum, reflecting a net initial yield1 of 6.21%.
The agreed purchase price of £15.0 million was funded from the Company’s existing debt resources, moving net gearing2 to 22.7% loan to value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company’s discretionary investment manager), said:
“Well located retail warehouses let off low rents are complementary to online retailing and have remained in demand during the restructuring of the retail market. This purchase, which was agreed off-market at an attractive net initial yield, offers long income from a very strong tenant line up with opportunities to enhance rents by developing a drive-through restaurant and installing electric vehicle charging points.”
1 Passing rent divided by valuation plus assumed purchasers’ costs.
2 Gross borrowings less unrestricted cash divided by last published property portfolio valuation.