The Charities Property Fund, advised by Cordea Savills, has completed the purchase of a B&Q warehouse in Redditch, Worcestershire for £16.3 million (approx. 18 mln.) from PRUPIM. The Fund, which targets a total return of 8.0%, invests directly in a diversified portfolio of UK commercial property and has currently £229 million in assets under management with over 1,000 investors.
The new purchase, which will become the largest asset in the portfolio, was acquired for a net initial yield of 7.5%, although this reflected a yield of 7.9% to the Fund as it is stamp duty exempt. This is in line with its objective of providing secure income whilst offering scope for rental and capital growth.
The property is a purpose-built retail warehouse constructed in 2002 and comprises 102,500 ft² (9,500 m²) in total. It is entirely let to B&Q plc for a term of 25 years, expiring in July 2027, leaving 18 years unexpired which is significantly longer than the average lease in the Fund's portfolio. B&Q plc is UK's leading DIY and garden centre retailer with a 14.8% share of the repair, maintenance and improvement market.
Harry de Ferry Foster, Director of Fund Management at Cordea Savills commented: "This deal was sourced off-market at a time when there is a shortage of investment-grade property for sale and plenty of competition for such assets, demonstrating the ability of our team to acquire quality properties. While the retail warehouse weighting in the fund is higher than our target, we feel that this is appropriate due to an attractive income return and a strong covenant."
BC Commercial and CWM acted for the Fund while PRUPIM represented themselves.
The Charities Property Fund was the first Common Investment Fund available to all charities in England and Wales, and more recently to all UK charities, to invest directly in UK commercial property. The Fund is managed by Mayflower Management Company with Cordea Savills acting as Property Manager and has been specifically designed to meet the needs of charities, allowing them access to professional property investment and management while avoiding the time and expense of property administration.