Custodian REIT is pleased to announce a further property purchase.
The Company has acquired a 42,289 sq ft car dealership, located at the ‘Pyramid Roundabout’, Stockport one mile from the town centre on Junction 1 of the M60. Nearby occupiers include Audi, Volkswagen, Lexus, Hyundai and Mazda.
The property is let to Benham (Specialist Cars) Limited (t/a Williams Stockport BMW and Williams Stockport Mini) on a lease expiring on 23 August 2057 with break options every 10 years and RPI rental uplifts every five years. The current passing rent of £658,532 per annum, reflecting a net initial yield1 of 6.99%, is expected to increase to circa £732,350 per annum at the August 2017 rent review, reflecting a reversionary yield of 7.77%.
The agreed purchase price of £8.84 million was funded from the Company’s existing cash resources, resulting in net gearing2 increasing to 20.0% 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 Stockport’s premier motor retail pitch, let to a national motor retailer on a long-term lease. The lease has the benefit of RPI linked increases providing a strong reversionary yield.”
1 Portfolio passing rent divided by portfolio valuation plus estimated purchasers’ costs.
2 Gross borrowings less unrestricted cash divided by last published property portfolio valuation.