Custodian REIT (LSE: CREI), the UK property investment company, is pleased to announce the completion of a forward funding agreement for a pre-let development, together with the purchase of the development land.
The Company has acquired 0.4 acres of land in Maypole, Birmingham, adjacent to the busy A435 Alcester Road, one of the main arterial routes into Birmingham city centre.
The development will comprise an 1,800 sq ft drive-through coffee shop with 16 parking spaces and construction is being phased over an expected six month build period.
The unit, to be developed by Deeley Properties Limited, has been pre-let to Starbucks Coffee UK Limited on a 15 year lease, without break, with five yearly upward only market rent reviews. On completion of the development for a total consideration of £1.75 million, the total passing rent will be £120,000 per annum reflecting a net initial yield of 6.43%.
The land purchase price of £1.0 million was funded from the Company’s existing cash facilities, resulting in net gearing2 increasing to 21.7% loan to value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company’s discretionary investment manager), said:
“The growth of drive-through stores is being driven by the likes of Costa, Starbucks and Greggs and is proving popular with retailers and customers, which is leading to rental growth in the sector. The location of this property on an arterial access route for Birmingham city centre allows easy accessibility for traffic both entering and leaving the City, enhancing the site’s offering.”