LondonMetric Property Plc announces it has exchanged on a portfolio comprising two retail warehouses in Cardiff and Milton Keynes from clients of JP Morgan Asset Management for £25.8 million (net of acquisition costs) (approx. €30 million) reflecting a combined net initial yield of 8.0%. The acquisitions will be funded from existing resources.
In Milton Keynes, Westcroft Retail Park comprises 75,600 ft² of Open A1 space (including food) across eight units let to tenants including Boots, B&M, McDonalds and KFC and is situated adjacent to a recently refurbished 95,000 ft² Morrisons. The park is fully occupied with an average unexpired lease term of 6.8 years to expiry and first break.
In Cardiff, Seager Retail Park comprises 33,800 ft² of bulky goods consented space let to Wren Kitchens, Carpetright and Pets at Home. The park is fully occupied with an average unexpired lease term of 8.3 years (6.5 years to first break).
Following the acquisition, the LondonMetric retail investment portfolio will comprise 35 assets with a combined portfolio value of £384.5 million, representing 33% of the enlarged LondonMetric portfolio. The retail investment portfolio’s occupancy is 98%, with an average passing rent of £16.40 psf and a weighted average unexpired lease term of 10.6 years (9.8 years to first break). Fixed rental uplifts across the retail investment portfolio represent 24% of total retail rental income, and 10% of the Group’s contracted rental income.
Andrew Jones, Chief Executive of LondonMetric, commented:
“Both parks offer significant asset management opportunities to re-gear the leases, improve the tenant mix and to grow the income. Together with the £60 million of retailer distribution acquisitions recently announced in Bedford and Birmingham, today’s acquisition keeps us firmly on track to grow yields and extend our lease lengths.
“When combined, these four recent acquisitions represent a total equity investment of £41.3 million, equating to 61% of the equity released from the distribution portfolio sale announced in June 2013. We are reinvesting these proceeds at an average yield of 7.4% capitalizing on a yield arbitrage 115bps over our disposal yield and extending our lease term to 10.3 years.”
Edgerley Simpson Howe advised LondonMetric and Yarnold & Partners and Cushman and Wakefield advised the clients of JPMorgan Asset Management.
Source: FTI Consulting
