Custodian REIT has announced that it intends to try to raise a further £20m from investors as it continues to expand its portfolio. This morning’s acquisition is of a 44,192 sq ft industrial unit on the Tilbrook Industrial Estate, Milton Keynes. They are paying £2.1m for it. the new property is immediately opposite a 52,532 sq ft unit that Custodian bought in December 2014 on the same estate (pictured), which, they say, has excellent access to junction 13 of the M1.
The new property is let to Domino’s Pizza Group Limited 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. Custodian say they will undertake a comprehensive refurbishment of the property once it is empty and then try to take advantage of what they think will be a strong occupier market when re-letting in 2016.
This deal has been funded from their existing revolving credit facility. On 21 January, Custodian entered into an agreement with Lloyds Bank for a second term loan of £10m, 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 loan to value is now 15.2%.
CREI : Custodian REIT still expanding