21 December 2015

Custodian REIT announces the acquisition of Phoenix Leisure Park, Crewe

Custodian REIT is pleased to announce a further property purchase.

Property purchase

The Company has acquired the 55,713 sq ft Phoenix Leisure Park, Crewe, comprising four freehold units occupied by Pizza Hut, Mecca Bingo, Odeon Cinemas and MFA Bowl. The park is near Grand Junction Retail Park and within walking distance of the town centre and railway station.

The units’ leases expire between June 2030 and March 2040 with a total passing rent of £523,625 per annum, reflecting a net initial yield of 7.50%.

The agreed purchase price of £6.6 million was funded from the Company’s cash resources following an issue of new shares in December 2015, which raised £44.25 million (before costs and expenses). The Company has £40 million of term debt and an undrawn £35 million revolving credit facility, with net gearing* of 5.8% following the purchase. On completion of the purchase of a portfolio of 11 UK commercial properties for an aggregate consideration of approximately £69.4 million expected to complete in early January 2016, the Company’s net borrowings are expected to increase towards the target ratio of 25% loan to value.

Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company’s discretionary investment manager), said:

“We are delighted to have secured this recently refurbished restaurant and leisure park that adds further long-term income to the Company’s portfolio at a price which demonstrates the value of small lot size regional property. Crewe is dominated by two established out of town parks, Phoenix Leisure Park and Grand Junction. A McDonald’s restaurant and Hungry Horse public house have recently opened in the vicinity, which further establish the location.”

*Gross borrowings less unrestricted cash divided by property portfolio valuation.