LondonMetric Property has acquired a retail park asset from an open ended property fund for £38.0m through one of its joint ventures (LondonMetric share: £19.0m).
The acquisition price reflects a net initial yield of 5.4%, rising to 5.7% upon completion of short term asset management initiatives.
The 68,000 sq ft property is located on a five-acre site on the Old Kent Road in South East London and is let to B&Q, Pets at Home and Halfords. The site benefits from planning for 1,100 new residential apartments.
Simultaneous with the acquisition, LondonMetric has materially extended the WAULT and increased the annual rent by 54% from £1.4m to £2.1m, with 85% of the income subject to contractual rent reviews. Upon settlement of the next reviews and completion of other asset management initiatives, the yield on cost is expected to increase to around 7%.
Following the acquisition, LondonMetric has a 69% equity interest in the joint venture.
The acquisition follows LondonMetric’s recent sale of a retail park in Tonbridge for £22.0m at a net initial yield of 5.2%.
Andrew Jones, chief executive of LondonMetric, said: “This is an exceptional asset in a prime central London location where the demand for higher value alternative uses more than underpins the purchase price. The simultaneous regears and rental increases demonstrate our strong retailer relationships and high occupier commitment to retain representation in a location where de-retailing is seeing quality retail space lost to alternative uses on an almost unprecedented basis.”
LMP : LondonMetric acquires London retail park for £38m