Ediston Property Investment Company (EPIC) has announced it has started construction of a retail park, in a vote of confidence for the retail sub-sector.
The 48,000 sq ft retail park and petrol filling station in Haddington, East Lothian (near Edinburgh), is 97% pre-let to Aldi, Home Bargains, The Food Warehouse, Costa Coffee and Euro Garages.
Construction is expected to complete in June 2021 at a cost of £7.5m. The company said the development should generate an income return of cost of around 8% per annum.
Once completed and fully occupied (it has a 1,500 sq ft unit vacant), the retail park will provide EPIC with a rental income of £875,000 per annum and will have a weighted average unexpired lease term of 14.4 years, assuming the vacant unit is let for a term of five-years.
It will be funded through a combination of the company’s existing debt facilities and cash resources
EPIC’s retail warehouse weighting will increase from around 60% to 64%.
[QD comment: The retail park sub-sector has proved to be resilient during the COVID-19 pandemic, with their locations and store size supportive of social distancing. The sub-sector also has favourable demand and supply characteristics, with many retailers including the big boys Next and Marks & Spencer as well as the grocers and discount retailers expanding in the space. Schemes that are let at lower, more sustainable levels of rent (like this one which has an average rent of £18 per square foot) don’t have the same pressure on values as their over-rented counterparts, but has seemed to have been dragged down with the wider retail sector. Prospects for the sub-sector are good and QuotedData published a piece in May 2020 that explains why, which can be read by clicking here.]
EPIC : Ediston Property Investment Company begins construction of retail park