Schroder UK fund buys serviced apartments in London at 5.5% yield

Schroder UK Real Estate Fund (SREF) has completed the £32.4 mln (€42 mln) purchase of two purpose-built serviced apartment buildings at the High Point Village mixed-use development in Hayes, West London.

SREF purchased the buildings, which are let to Staycity for a term of 25 years, reflecting an initial yield of 5.5%.

The two interconnected buildings are both let to Staycity Serviced Apartments, which began trading from the site in 2012 and has recently taken a lease on a further building providing an additional 125 rooms, totalling 269 across the site.

SREF said the purchase is 'a clear example' of its strategy to focus on London’s emerging hubs such as Hayes, which is currently being redeveloped with the £250 mln Old Vinyl Factory scheme.

'This acquisition fits perfectly with our fund-wide strategy to capitalise on the strong growth we are seeing across London’s ‘emerging’ markets,' said James Lass, fund manager, Schroder UK Real Estate Fund. 'The major regeneration drive already underway in and around Hayes will be further boosted by the arrival of Crossrail and we are confident that this will contribute to long-term, sustained demand in the area.'

JLL and Gowling WLG represented SREF. CBRE and Howard Kennedy represented Ballymore.