Custodian REIT purchases prime distribution unit in West Yorkshire
Custodian REIT is pleased to announce a further property purchase, bringing the total funds invested following its initial placing and admission to the Official List on 26 March 2014 to £100.9 million.
The Company has acquired a prime 63,240 sq ft distribution unit on the Normanton Industrial Estate, West Yorkshire, located at junction 31 of the M62.
The unit is let to Your Electrical Supplies, Service and Solutions (B) Limited (trading as YESSS Electrical), on a lease expiring on 18 June 2022 with a rent review on 19 June 2017. Total passing rent is £282,300 per annum, reflecting a net initial yield of 6.28%.
The agreed purchase price of £4.25 million was funded from the Company's cash resources, with net borrowings following the acquisition of 9.3% loan to value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company's external fund manager), said:
"Despite an initial yield of 6.28% we believe the property will show a reversionary yield of circa 7% following the 2017 rent review, as prevailing market rents for prime distribution units in this location are comfortably in excess of the current passing rent. The purchase price reflects a capital value of £67.20 per sq ft, which represents good value for this high quality unit. The M62 corridor is a nationally recognised distribution hub and, as such, commands strong competition for modern, well positioned properties of this ilk. YESSS Electrical operate the unit as their UK headquarters and principal distribution hub, demonstrating their belief in the strength of the unit and its location."
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