The Company has acquired the 43,000 sq ft Evesham Shopping Park, one mile from Evesham town centre and two miles from the A46, linking the M5 and M40. The park comprises a terrace of five units occupied by Next, M&S, Boots, Argos and Poundstretcher, with nearby retailers including Tesco, and B&M.
The units' have a weighted average unexpired lease term to first break or expiry of 6.8 years and a price reflecting a net initial yield[1] of 6.04%.
The agreed purchase price of £14.2 million was funded from the Company's existing debt resources, resulting in net gearing[2] increasing to 22.8% loan to value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company'sdiscretionary investment manager), said:
“Both Next and Boots have recently extended their leases at the passing rent indicating their commitment to the location. B&M Bargains has recently constructed a 25,000 sq ft unit adjacent to the park, demonstrating that together with the Tesco Extra opposite this is the prime out of town location in Evesham. We are pleased to have secured this opportunity to acquire a very well-let park at a price which reflects a discount to recent market pricing.
“We believe well located, out-of-town, retail warehouse properties which, either do not compete with on-line retailing or are complimentary, through offering easy click and collect services will remain in demand despite the current restructuring of the retail market. This acquisition presented an opportunity to buy a prime asset, let to blue chip tenants, at a sufficiently high yield to support our fully covered dividend.”
1 Passing rent divided by valuation plus assumed purchasers' costs.
2 Gross borrowings less unrestricted cash divided by last published property portfolio valuation.