LondonMetric Property has acquired a NNN retail asset from an unnamed open ended property fund for £38 mln (€44 mln) through one of its joint ventures.
The deal reflects an initial yield on cost to LondonMetric of 5.4%, rising to 5.7% upon completion of short term asset management initiatives.
The 68,000 sq ft (6,300 m2) 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 weighted average unexpired lease term and increased the annual rent by 54% from £1.4 mln to £2.1 mln, 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 7%.
Following the acquisition, LondonMetric has a 69% equity interest in the joint venture.
The acquisition follows on from LondonMetric's recent sale of a retail park in Tonbridge for £22 mln at a NIY of 5.2%.
Andrew Jones, Chief Executive of LondonMetric, commented: ‘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.’
LondonMetric was advised by Cortex Partners and Savills advised the vendor.
