The Company has acquired a 14,926 sq ft Volkswagen car dealership, situated prominently on Belton Road, the primedealership, trade and retail warehouse location in Loughborough, one mile from the town centre and three miles fromjunction 23 of the M1. Car dealerships in the vicinity include Peugeot, Toyota, Nissan, Inchcape Mercedes-Benz, Vauxhalland Kia.
The property is let to Lister Group Limited on a lease expiring on 30 November 2038, subject to a break in 2028, with a current passing rent of £160,000 per annum, reflecting a net initial yield1 of 6.37%. The lease benefits from rent reviews linked to RPI, subject to a cap of 3.0% per annum rental growth.
The agreed purchase price of £2.36 million was funded from the Company's existing debt resources, resulting in net gearing2 increasing to 25.7% loan to value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company'sdiscretionary investment manager), said:
“This opportunity in Loughborough's prime motor trade pitch, let to a strong tenant, on a long-term lease, including RPI linked rent increases, provides income security and a strong reversionary yield. We believe the property's prime location and low passing rent will provide the long-term opportunity that meets the investment criteria of Custodian REIT.”
Custodian REIT plc is a UK real estate investment trust, which listed on the main market of the London Stock Exchange on 26 March 2014. Its portfolio comprises properties predominantly let to institutional grade tenants on long leases throughout the UK and is principally characterised by properties with individual values of less than £10 million at acquisition.
The Company offers investors the opportunity to access a diversified portfolio of UK commercial real estate through a closed-ended fund. By targeting sub £10 million lot size, regional properties, the Company intends to provide investors with an attractive level of income with the potential for capital growth.