Schroder Real Estate Investment Trust has exchanged unconditional contracts to acquire Stacey Bushes Industrial Estate in Milton Keynes for GBP9.2 million.
The property produces a rent of GBP755,726 per annum which results in a net initial yield of 7.76 per cent per annum.
This follows the announcements regarding recent sales including the announcement dated 4 August 2014 with regards to the disposal of Wembley, which produced gross sale proceeds of GBP7.56 million and was a non-income producing site.
The freehold property comprises a 213,536 sq ft multi-let industrial estate immediately adjacent to the A5 dual carriageway on the west side of Milton Keynes. The property, which was originally constructed in the 1980s, has recently undergone an extensive refurbishment to provide a modern accommodation with unit sizes ranging from 3,700 sq ft to 10,000 sq ft. The property is currently let to 12 tenants with an average unexpired lease term, assuming all tenant breaks are exercised, of 4.5 years.
There are currently eight vacant units on the estate, representing approximately 20 per cent by area, providing scope to add value through a strategy to re-let the units to increase net income. Assuming the vacant units are re-let at rents of between GBP4 and GBP4.50 per sq ft, the yield increases from 7.76 per cent to approximately 10 per cent.
Following completion of the acquisition, which is expected to take place on 21 August 2014, the company will have cash of approximately GBP14.2 million and a net loan-to-value, based on the independent valuation as at 30 June 2014, of approximately 32 per cent.