British Land has concluded an £88 million (approx. €121 mln) sale and leaseback deal with Cable & Wireless for nine properties.
The 25 year leases are RPI linked to a maximum of 6% per annum compound. Initial rental income will be £4.54 million per year for the first five years and thereafter reviewed at five year intervals. The net initial yield is 5%.
The deal is the fourth addition this year to British Land's £2-billion portfolio of properties let on index-linked or minimum uplift rental agreements.
The majority of the Cable & Wireless properties in the portfolio are located in London and operate as offices and network sites. The total floor area is 356,000 ft².
Bob Bowden, British Land Investment Director, said: "RPI-indexed leases provide us with security of income and good cash flow growth from the fixed uplifts. This transaction adds to our investments in the important London office sector where we expect rental value growth to exceed RPI and to be recognised in valuations and captured at lease expiry."
Clay Street Property Investment Consultants and CCRE acted for British Land. Doherty Baines acted for Cable & Wireless.
Source: British Land