Picton Property Income has disposed of a non-core property in Drury Lane, Oldham, for GBP2.2 million, completing its business plan for the asset.
The warehouse was purchased in April 2010 for GBP0.4 million with an annual rent of GBP74,000 as part of the acquisition of Rugby REIT. During Picton’s ownership, it secured planning consent to change the use from industrial to leisure, completed a full refurbishment, acquired adjacent land for car parking and subsequently let the transformed asset to The Gym Group Limited until 2031 at an annual rent of GBP150,000.
The sale price reflects a net initial yield of 6.4% and a 10% premium to the 31 December 2016 external valuation. Net of the GBP0.8 million of costs incurred since acquisition, the asset was sold at an 80% profit.
Michael Morris, Chief Executive of Picton Capital Limited, commented: “This is a good example of how we used our knowledge of the local market and asset management expertise to double the income and capture a significant increase in value. The proceeds can be used, together with existing funds, to opportunistically acquire assets in larger lot sizes that we believe will generate attractive future returns.”