15 December 2014
Custodian REIT acquires two modern office buildings in Leeds
Custodian REIT is pleased to announce a further two property purchases, bringing the total funds invested following its initial placing and admission to the Official List on 26 March 2014 to £68.3 million.
The Company has acquired two modern office buildings in Leeds city centre, Cardinal House and 40 David Street, occupying a combined 35,910 sq ft, close to Leeds railway station and with access to the M1, A1 and M62. The units are let to Enact Properties Limited whose ultimate parent is First American Financial Corporation, a multinational insurance business. Enact provides a full range of legal and conveyancing services for residential property.
Both properties are let on four year leases expiring on 25 December 2018, with no break option. The current passing rent on Cardinal House is £339,000 per annum, reflecting a net initial yield of 8.43%, and £288,750 per annum on 40 David Street, reflecting a net initial yield of 8.76%.
The combined purchase price of £6.9 million was funded from the Company’s existing debt facilities, resulting in net borrowings increasing to 4.9% loan to value, in line with the stated investment strategy of a target gearing ratio of 25% loan to value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company’s external fund manager), said:
“The Leeds office market is witnessing the first speculative development in many years, which is a bellwether of the health of the occupational market in the city. Prime rents are moving on and rents on well-refurbished space are following that trend. These buildings benefit from excellent car parking provision and being well located for the station and the traditional city centre. We believe the buildings are well matched with tenant demand and subject to some refurbishment at the end of the leases, could see some marked rental growth.”
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