Custodian REIT PLC (LON:CREI) has purchased a Volkswagen car dealership in Loughborough which has been leased until 2038.
The property investment firm said it had purchased the 14,926 square foot site for £2.36mln which was funded from its existing debt resources and increased net gearing to 25.7% loan to value.
The site is currently let to Lister Group Limited, a car dealer, on a lease expiring on 30 November 2038 with a current passing rent of £160,000 per annum, reflecting a net initial yield of 6.37%. The lease benefits from rent reviews linked to the retail price index (RPI) and is subject to a cap of 3.0% per annum rental growth.
Richard Shepherd-Cross, managing director of Custodian’s discretionary investment manager, Custodian Capital Limited, said the purchase provided “income security and a strong reversionary yield”.
“We believe the property's prime location and low passing rent will provide the long-term opportunity that meets the investment criteria of Custodian REIT" he added.
In early trading Monday, Custodian REIT shares were steady around 116p.