Picton Property Income (PCTN) has announced that it has completed the freehold acquisition of 109-117 High Street, Cheltenham for £5.3m. The property, which is mixed-use, comprises 7,700 sq. ft of ground floor retail space with 11,450 sq. ft of office space over two upper floors. It is located in Cheltenham’s pedestrianised town centre, adjacent to John Lewis. PCTN says that the property underwent a comprehensive refurbishment in 2020 and has strong net zero credentials – including EPC ratings of B on the office and retail elements. The property is leased to four occupiers, including Tesco, Just Go Holidays and Barnardo’s, with an average lease length of 12 years to expiry and eight years to break. The current rental income is £0.4m per annum, equating to £21 per sq. ft, with the majority of leases containing fixed rental uplifts that will increase income to £0.5 million per annum by 2026. The purchase price reflects a net initial yield of 7.2%, rising to 9.0 % by 2026. PCTN says that the low capital value of £277 per sq ft is below its estimated replacement cost. PCTN has funded the acquisition through its revolving credit facilities.
Comments from Michael Morris, Chief Executive of Picton Property Income
“This is our second, mixed use acquisition this year. It is a quality, future proofed building, that has recently been leased and after significant expenditure. The income profile and fixed rental uplifts will further improve our earnings.”