4th Jun 2015 09:21
LONDON (Alliance News) - Custodian REIT PLC Thursday said it has agreed a forward funding deal for a pre-let development, as well as the acquisition of the development land.
The UK property investment company said it has acquired 1.88 acres of land at the Tournament Fields development, two miles south west of Warwick, England, close to Birmingham International Airport.
The development consists of a 27,400 square foot single storey industrial warehouse unit. Construction is being phased over a period expected to last five months, with development funding to be drawn down in the form of monthly certified payments.
The unit is to be developed by Clowes Developments and has been pre-let by Semcon Product Information UK Ltd on a 10.5 year lease with no break option.
According to Custodian REIT, completing the development will cost GBP2.6 million, with passing annual rent to be GBP180,000 once that process is complete, equivalent to a net initial yield of 6.64%.
The company is buying the land for about GBP850,000, funded with existing debt, bringing net borrowings to 11.1% on a loan to value basis.
"The current shortfall in supply of quality industrial units has led to increased demand for development funding of this kind throughout the UK. This opportunity was of particular interest due to a well located unit and strong tenant on a long term lease," Richard Shepherd-Cross, managing director of Custodian Capital Ltd, the company's external fund manager, said in a statement.
"We anticipate further investment in pre-let development projects while the requirement for good quality units in areas of high demand continues," Shepherd-Cross said.
Shares in the company were down 0.2% at 108.81 pence on Thursday morning.
By Samuel Agini; [email protected]; @samuelagini
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