26 January 2015
Custodian REIT acquires industrial unit in Milton Keynes
Custodian REIT, the UK property investment company, 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 £89.6 million.
Purchase of property
The Company has acquired a 44,192 sq ft industrial unit on the Tilbrook Industrial Estate, Milton Keynes, immediately opposite the 52,532 sq ft unit purchased in December 2014 on the same estate, which has excellent access to junction 13 of the M1.
The property is let to Domino’s Pizza Group Limited (“Dominos”) on a lease expiring on 10 November 2015 with current passing rent of £250,000 per annum, reflecting a net initial yield of 11.25%. Dominos have confirmed they intend to vacate the property at lease expiry.
New term loan
On 21 January 2015, the Company and Lloyds Bank plc entered into an agreement to provide a second term loan of £10 million, which has been fully drawn down. Under the terms of the agreement, the Company will pay annual interest of 1.9% above three-month LIBOR on the loan, which is repayable on 10 October 2019.
The agreed purchase price of £2.1 million was funded from the Company’s debt facilities, with £8.7 million now deployed from the Company’s revolving credit facility in addition to £20 million of term debt. Total net borrowings have increased to 15.2% loan to value.
Commenting on the acquisition, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company’s external fund manager), said:
“Having recently acquired an adjacent property on the Tilbrook Industrial Estate we are aware of the high demand for property in this location and took the opportunity to enhance our ownership on the estate in a competitively priced deal. Dominos intend to vacate the unit at lease expiry, following which we will undertake a comprehensive refurbishment and take advantage of what is expected to be a strong occupier market when re-letting in 2016.”
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