16 July 2014

Custodian REIT acquire nine retail properties boosting total funds invested to £34.7 million

Custodian REIT is pleased to announce the acquisition of a retail portfolio of nine properties, bringing the total funds invested following its initial placing and admission to the Official List (IPO) on 26 March 2014 to £34.7 million.

Custodian REIT has acquired a nationwide portfolio of eight high street retail units and one trade counter unit, including six freeholds and three long-leasehold titles. The company has completed the purchase of seven of the properties and exchanged on a further two, subject to securing landlords’ consent to the assignment of the long-leasehold interests. Tenants within the portfolio include JD Weatherspoon, Superdrug, Whistles, Urban Outfitters, Poundland, Iceland, Cotswold Outdoor, Magnet and The Works.

The portfolio currently generates a net income of £1.28 million. The total purchase consideration of £17.4 million includes the commitment to purchase the two long leasehold interests and is being funded from the Company’s existing resources. Net initial yields on the portfolio range from 5.75% to 8.30% with an overall net initial yield (adjusted to reflect reduced agent’s fees) of 6.97%. Unexpired lease terms across the portfolio range from 3.0 years to 21.3 years, with an average weighted unexpired lease term of over 8.2 years.

This acquisition completes the investment of available cash following the IPO. To fund future acquisitions, the company has started to draw on its pre-agreed revolving credit facility of up to £25 million. Drawing down on this facility enables the company to work towards meeting its target gearing for the portfolio of 25% loan to value.

Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited and external fund manager of Custodian REIT, said:

“We are delighted to have secured this institutional grade retail portfolio of nine properties at a price which reflects a significant discount to historic pricing. All the properties are located in towns with very low vacancy rates and the majority of shops are let at rental levels which reflect open market value. These dynamics lay the foundations for future rental growth.”

For further information on their investments, please visit Custodian REIT’s property portfolio.