An acquisition hungry investment company has continued its acquisition spree by buying nine retail units for £17.4m — bringing its property spending since its March launch to almost £130m.
Within days of opening its books Leicestershire-based Custodian REIT — a spin-off of pensions and wealth management company Mattioli Woods — snapped up a £95m package of UK commercial property from an existing portfolio of 48 properties held by clients of Mattioli Woods.
And following its admission to the main market of the London Stock Exchange on 26 March it added two Merseyside industrial units to its assets, funding the £3.1m purchase from its own cash reserves.
The first unit on the 100-acre Estuary Commerce Park, close to Liverpool’s John Lennon International Airport, is let to Powder Systems Limited (PSL) on a 20-year annual lease of £135,500. The building was purpose-built for PSL with expansion space on site.
An adjacent logistics warehouse is let to DHL International, again on a 20-year lease, worth £119,239 per annum. DHL has been in occupation since 2000 and elected not to trigger its 2010 break clause.
Custodian’s latest nationwide addition involved the purchase of eight high street retail sites and a Leicester Magnet trade counter in Aylestone Road, which sublets part if its space to Carpetright.
All the city centre shop sites are located in Chester, Shrewsbury, Southampton and Dumfries let to tenants such as JD Weatherspoon, Superdrug, Whistles, Urban Outfitters, Poundland, Iceland, Cotswold Outdoors and The Works. The portfolio currently generates around £1.28m a year.
Richard Shepherd-Cross, of Custodian Capital, the property company’s external fund manager explained: “We are delighted to have secured this institutional grade retail portfolio of nine properties at a price which reflects a significant discount to historic pricing.
“All the properties are located in towns with very low vacancy rates and the majority of shops are let at rental levels which reflect open market value, laying foundations for growth.”
Prior to transferring the majority of its properties to the REIT this spring, Custodian Capital had amassed an 85 building portfolio worth more than £140m. The rationale behind this, explains the company, was to provide our clients with a less restrictive way of investing in the UK commercial property market whilst affording a greater level of liquidity.
Custodian REIT, which raised £55m through its Stock Exchange flotation, is targeting small commercial and industrial units valued at less than £7.5m each. Shepherd-Cross confirmed the investor now has the ability to draw on a pre-agreed credit facility of up to £25m for future acquisitions.
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