15 January 2015
Custodian REIT acquires industrial unit in Plymouth
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 £87.5 million.
The Company has acquired a 60,187 sq ft industrial unit on the Language Science Park, Plymouth. The unit is let to Geocel Limited (“Geocel”), a market leader in the development, formulation, manufacture and marketing of quality sealants and adhesives used in the building trade. The acquired unit comprises a manufacturing facility and the UK head office of Geocel, a subsidiary of the multi-national US paint manufacturer The Sherwin-Williams Company, which also owns Ronseal, Purdy Professional Painting Tools and Altax in the UK.
The unit is let on a reversionary lease, expiring on 30 May 2024 at a rent of £257,500 per annum, reflecting a net initial yield of 7.49%.
The agreed purchase price of £3.25 million was funded from the Company’s existing facilities, with total funds of £17.0 million now deployed from the Company’s £25.0 million revolving credit facility, bringing total borrowings to £27.0 million. Borrowings have increased to 14.5% 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:
“This well-specified industrial unit has been the head office for Geocel for 25 years. The tenant has demonstrated a long-term commitment to the building having agreed terms to take a reversionary lease until May 2024 and to undertake significant expenditure on the fabric of the building. This will allow for their future operational developments at the site. The lease provides a fixed rental uplift in May 2020 to £280,000 representing rental growth of 1.57% per annum until the next rent review.”
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