7th Feb 2014 08:42
LONDON (Alliance News) - Schroder Real Estate Investment Trust Ltd Friday said it has bought an office building in Rugby for GBP3.95 million and completed the disposal of its 19.5% stake in Merchant Property Unit Trust for net proceeds of about GBP3.25 million.
In a statement, the trust said the price paid for the Rugby office building reflects a net initial yield of 8%. The building, comprising 36,016 square feet and 95 car parking spaces, is let to Morgan Sindall PLC as its regional headquarters for 15 years without tenant breaks at GBP335,000 a year, or GBP9.30 per square foot, with a guarantee from Morgan Sindall.
"The lease benefits from five yearly upwards only rent reviews linked to the Retail Price Index, subject to a minimum uplift of 2% per annum compound and a maximum uplift of 4% per annum compound," Schroder said in a statement.
Schroder Real Estate said it has cash of GBP14.2 million following the office acquisition and stake disposal.
"These two transactions provide a good example of our ability to realise value and reinvest the proceeds into higher yielding assets to support our strategy of growing net income and dividend cover. The property in Rugby complements the Company's current portfolio by offering a long lease to an established tenant at an above average initial yield with inflation-linked rental uplifts," Nick Montgomery, head of UK Investment at Schroder Property Investment Management said.
"We are continuing to focus on unlocking value in our portfolio and enhancing income by disposing of low or non-income producing properties and redeploying capital into higher income producing investments. As such, we have identified further transactions that are aligned with our strategic objectives and hope to make further announcements in this regard in due course," he added.
Schroder Real Estate shares were up 0.5% at 53.75 pence early Friday.
By Steve McGrath; [email protected]; @SteveMcGrath1
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