Savills Investment Management (Savills IM) has completed £47m (€60.4m) of retail warehouse and industrial transactions as part of the repositioning of its UK Income & Growth Fund (the ‘fund’).
The transactions include the sale of the Gallagher Retail Park in Bristol to CCLA’s Local Authorities’ Property Fund for £32.325m (€41.5m), reflecting a net initial yield of 5.9%.
The capital raised has been reinvested in the Fujitsu Data Centre in Stevenage, for £8m (€10.3m), reflecting a net initial yield of 4.7%. The property is let to Fujitsu Data Services Limited until 2035 with annual rental increases fixed at 2.5%.
Unit 6, Henley Business Park, Guildford has been acquired for £7.3m (€9.4m), reflecting a net initial yield of 5.25%. The property, acquired off-market, is let to Meridian Metal Trading Limited on a new 15-year lease with rent reviews linked to RPI.
Jamie Pearson, fund manager UK Income & Growth Fund, commented: “These transactions are part of our strategy to defensively position the Fund for the next phase of the market cycle and ensure it continues to deliver a low risk 5% income return to investors in the long term. Given market capital growth is likely to moderate, most of the return will come from income and income growth. The Fund is well positioned on both fronts with an income distribution higher than its benchmark and with 69% of the portfolio including contracted rent increases.
“UKIG has continued to deliver solid growth both in terms of capital and income returns. Its consistent track record can be attributed to its focus on buying assets with sound fundamentals that have provided safe and reliable income streams together with the team’s ability to add value via asset management.”
Savills IM was advised by Savills. CCLA was represented by Clay Street, the private vendor of the Fujitsu Data Centre was represented by JLL, and Meridian Metal Holdings was represented by Deloitte.
