Picton Property has acquired a fully let office building in Salford Quays, Greater Manchester for £17.6m. After finance costs this transaction will increase the Company’s net income by approximately £900k per annum, rising to £1.2m per annum in April 2017. This reflects an increase in dividend cover of 5% and 7% respectively.
The property, known as Metro, Trafford Road, is located within Salford Quays, 2.5 miles west of Manchester city centre and close to the BBC’s home at Media City. Constructed in 2008, it comprises a 71,000 sq ft office building with a BREEAM “Excellent” rating and 228 car spaces. The location adjacent to the Exchange Quay tram link also provides excellent connectivity to the surrounding area.
The property is fully let to four tenants producing income of £1.15m per annum, which will increase to £1.53m per annum in April 2017, with an average lease length of 8.3 years to expiry (5.6 years to break). It is let off a low average rent reflecting £21.50 per sq ft, including the car parking spaces.
The pricing reflects a net initial yield of 6.2%, rising to 8.3% in April 2017 and a capital value of under £250 per sq ft, which is close to the cost of construction.
The purchase was funded using proceeds from the disposal in November 2015 of a small low yielding retail unit and £15.8m from Picton’s revolving credit facility. Following this acquisition the Company has over £87m of uncharged assets and over £10m of undrawn facilities still available.
PCTN : Picton buys Metro, Trafford Road, Manchester