Custodian REIT is pleased to announce a further property purchase.
The Company has acquired a 27,480 sq ft car dealership, located within York’s ‘motor alley’ two miles from York city centre and adjacent to the A1237 ring road. Nearby occupiers include Vauxhall, Audi, BMW, Mercedes-Benz, Toyota and Volkswagen.
The property is let to Pendragon Property Holdings Limited (trading as Evans Halshaw Peugeot and Citroen) on a lease expiring on 27 February 2030 with a current passing rent of £240,000 per annum, reflecting a net initial yield1 of 5.75%.
The agreed purchase price of £3.92 million was funded from the Company’s existing debt facilities, resulting in net gearing2 increasing to 16.2% 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, well-established within York’s premier motor retail pitch and let to the UK’s largest motor retailer on a long-term lease. Despite a keen net initial yield we believe the property will show a reversionary yield of circa 6.75% following the 2020 rent review, as prevailing market rents are comfortably in excess of the current passing rent. The demand for this location is undoubted with Jaguar Land Rover having recently submitted planning for the development of a new dealership diagonally opposite the site.”
1 Portfolio passing rent divided by portfolio valuation plus estimated purchasers’ costs of 6.5%.
2 Gross borrowings less unrestricted cash divided by last published property portfolio valuation.