LondonMetric has sold Nottingham Road Retail Park in Mansfield and St Mary’s Road in Sheffield to Henderson Global Investors for £19.2 million, reflecting a net initial yield of 6.77% and generating a blended ungeared total return of 14.0% per annum.
Mansfield (47,100 ft² approx. 4,375 m²) was acquired in September 2010 for £7.25 million (approx. €23.07) with a void unit of 16,000 ft² (approx. 1,486 m²) Following a comprehensive refurbishment the entire accommodation was let to Currys PC World at a rent of £801,000 (approx. €962,000) per annum. The unexpired lease term is 12.5 years. The sale price of £11.5 million (approx. €13.8 million) generates an ungeared total return of 11% per annum.
Sheffield (28,700 ft² approx. 2,666 m²) was acquired in May 2011 for £2.4 million (approx. €2.88 million) having been void on acquisition. Following a material refurbishment the accommodation was let to both DFS and Wren Kitchens. The total rent is £572,000 (approx. €687,300) per annum with an unexpired lease term of 13.6 years (11.9 years to first break). The sale price of £7.7 million (approx. €9.25 million) generates an ungeared total return of 20% per annum.
Separately, MIPP, LondonMetric’s £150 million (approx. €180 million) joint venture with Universities Superannuation Scheme (“USS”), has completed on the sale of the Wickes unit in Oxford for £12.4 million (£4.1 million (approx. €4.93 million) LondonMetric share) to Lothbury Investment Management, reflecting a net initial yield of 5.3%. The unit comprises 28,200 ft² (approx. 2,620 m²) and is let at an annual rent of £698,000 (approx. €838,700). LondonMetric recently re-geared the lease to 24.8 years term certain.
Andrew Jones, Chief Executive of LondonMetric, commented:
“These disposals clearly endorse the validity of our business model by demonstrating the potential value that can be created through institutionalizing good quality secondary stock and demonstrates the depth of demand amongst institutional investors for well let real estate assets. The disposals allow us to crystallize attractive profits on cost and recycle our equity following completion of the asset management initiatives.”
Strutt & Parker advised Henderson on the purchase of Mansfield and Sheffield. Harvey Spack Field advised MIPP and CWM advised Lothbury on Wickes, Oxford.
Source: London Metric