LondonMetric Property, the new combine formed from the merger of London & Stamford Property and Metric Property Investments, has made its first acquisition.

LondonMetric Property, the new combine formed from the merger of London & Stamford Property and Metric Property Investments, has made its first acquisition.

The UK REIT said it is paying £92.4 mln (€108 mln) net of acquisition costs for a portfolio of six retail warehouse assets, reflecting an average net initial yield after purchasers’ costs of 7.8%.

The acquisition will be funded from existing resources including the revolving credit facility with Lloyds Banking Group.

The portfolio is being acquired from clients of Aviva Investors and comprises six out-of-town retail parks all located within approximately 100 miles of London.

The six assets provide a total area of nearly 400,000 sq ft (37,000 m2). The schemes are Christchurch Retail Park (Christchurch), B&Q (Leicester), Dunstable Retail Park (Luton), Cairngorm Retail Park (Milton Keynes), Mountbatten Retail Park (Southampton) and the B&Q/Halfords units (Tonbridge).

The portfolio will deliver an income of £7.5 mln per annum with 50% of the income subject to fixed uplifts or RPI linked increases over the next five years. The parks are well let with 98% occupancy and a weighted average unexpired lease term of over nine years.

Following completion of the acquisition, anticipated by mid-February, the LondonMetric retail investment portfolio will comprise 31 assets with a combined value of around £335 mln, representing 33% of the enlarged LondonMetric portfolio. The retail portfolio’s occupancy is 99%.

Andrew Jones, chief executive of LondonMetric, said the deal 'typifies the opportunities that the company is seeking to acquire'. 'It offers secure, well-let income with additional asset management opportunities and the ability to add value all in an area of the market where we have particular expertise.'

The income yield, combined with the existing debt facilities, will deliver initial cash-on-cash returns of over 12%, he added.

Cushman & Wakefield advised LondonMetric. Wilkinson Williams advised the clients of Aviva Investors.