UK Commercial Property Trust Limited (UKCPT) has exchanged contracts to acquire Regent Circus in Swindon for a consideration of GBP40.48 million at an equivalent yield of 5.3 per cent.
Regent Circus is a new, 97,000 sq ft purpose built family-orientated leisure development, which is 94 per cent pre-let and anchored by a Morrisons supermarket and Cineworld cinema. It is being acquired from developer Ashfield Land.
The Morrisons supermarket will open in November, with the leisure element expected to open in early 2015. On completion, the scheme will generate GBP2.1 million per annum in rental income (after rent free periods) from leases with an average length of 20 years to occupiers with a sound covenant base. The cinema lease also incorporates fixed rental increases.
Regent Circus is the first new retail and leisure scheme to be built in Swindon in a number of years.
The purchase will be financed in part by the GBP32 million in proceeds from the company’s treasury share issue in May with the remainder financed from existing resources. The consideration will be satisfied through a number of staged payments with GBP21.25 million payable around practical completion of the development in early November and the balance paid in tranches as the restaurant elements are completed.
Christopher Hill, chairman of UKCPT, says: “This acquisition supports the company’s ongoing investment strategy of acquiring assets that have the potential for both income and capital growth. It also represents an increase in the company’s leisure holdings, one of the company’s favoured sectors, and is let to tenants with strong covenants and on terms that will also improve the average lease length of the portfolio.
“The board is pleased that the investment manager has deployed all the proceeds of the treasury share issues in May so soon for this acquisition. The investment manager is actively looking at further opportunities in the market where the company can deploy capital at attractive price levels.”