UK Commercial Property REIT (UKCM), a vehicle managed and advised by Aberdeen Standard Investments, has invested £45.7 mln (€50 mln) in two deals, comprising a supermarket in England, plus a student housing scheme in Scotland.
UKCM has bought an Asda supermarket in Torquay, Devon, from Aviva Investors for £16.6 mln, representing a net initial yield of 4.70%, rising to 5.24% in July 2021.
The c. 33,000 ft2 (3,065 m2) supermarket is fully let to Asda on a long lease with an unexpired term of 15.5 years. The lease is subject to five yearly RPI linked rent reviews, with the next due in July 2021.
Will Fulton, lead manager of UKCM at Aberdeen Standard Investments, said: 'The Asda supermarket provides access to a long leased, convenience led asset in a strong location with a growing income stream through index-linked rent reviews in a segment of retail that has proven its resilience during the Covid-19 pandemic.'
In a separate transaction, UKCM has also agreed to forward fund the development of a purpose built student accommodation asset at 41-45 Gilmore Place in central Edinburgh for £29.1 mln.
Comprising 230 beds, the scheme will comprise over 90% en suite cluster rooms and a small number of studios. The purchase of land is expected to complete in February 2021, with delivery of the asset due in 2022, in time for the 2022/23 academic year.
The purchases will be funded through existing cash resources, with the company having also disposed of the M8 Interlink Industrial Estate, Coatbridge, for £25.4 mln.
Fulton added: 'Whilst the current Covid-19 environment has created a challenging environment for students we anticipate good demand for the 2022/23 academic year and beyond.
'This scheme is not only in an excellent location in one of the world’s leading university cities but will also offer students high quality modern accommodation with amenities.'
In addition, UKCM has completed the sale of the multi-let M8 Interlink Industrial Estate in Coatbridge for £25.4 mln. The disposal is in line with UKCM’s strategy to generate capital for reinvestment into opportunities with longer-term fundamentals.
Following these transactions UKCM, said it remained well capitalised, with £60 mln of cash resources available for investment and access to a further £150 mln of undrawn revolving debt.
Fulton concluded: 'Through these acquisitions we are enhancing our income and increasing the portfolio’s exposure to the alternatives sector.
'At the same time, this disposal is in line with our ongoing strategy to refine the portfolio and recycle capital into opportunities which offer longer term income growth potential.'
