Mayfair Capital’s PITCH acquires urban supermarket
Mayfair Capital’s Property Income Trust for Charities (PITCH) has acquired an urban supermarket property in North London for GBP12.7 million, reflecting 3.54 per cent net initial yield.
The asset was sold by CBRE UK Property PAIF (UKPP), a fund managed by CBRE Global Investors.
The purpose-built supermarket, which was constructed in 2000, is located in the affluent suburban area of Southgate, within the London Borough of Enfield. The property is let to M&S until 2045, which provides long-term attractive income – with the benefit of RPI rental uplifts every five years.
This investment is aligned to Mayfair Capital’s thematic investment strategy providing a modern supermarket embedded in a dense and growing urban area with constrained land supply. Even as online expenditure increases, demand for convenience-based localised food shopping facilities is likely to remain resilient – due to the dual role of supermarkets in serving physical shoppers and online order fulfilment, via click-and-collect and home delivery.
The property’s secure long-term income – with a passing rent of only £26.48 per sq ft – diversifies and extends the unexpired lease profile of the PITCH portfolio, as well as providing additional capital and income resilience. In addition, the longer-term potential for a high-density residential redevelopment in the land-constrained area of Southgate underpins the property’s investment value.
Mayfair Capital’s thematic approach to investing looks to capitalise on long-term structural changes in the economy by identifying drivers of occupational demand across five key areas – change and disruption, connectivity, climate and environment, communities and clustering and consumer and lifestyle. The Southgate property scores strongly across each of these thematic considerations.
Mayfair Capital was advised by Edgerley Simpson Howe, while the vendor CBRE Global Investors was advised by Montagu Evans on the lease structure, alternative use potential and sale.
Phil Sturdy, Investment Director, says: “Modern supermarkets play a key role in the evolving pattern of consumption in urban areas. While shoppers have a preference to shop locally, especially for convenience food-based goods, the ability of supermarkets to cater for click-and-collect and home delivery also means they can benefit from the ongoing rise of e-commerce. In addition, competition for land in this growing area of North London supports future long-term capital growth opportunities.”
Simon Martindale, Fund Manager of the Property Income Trust for Charities, adds: “This acquisition provides attractive and secure long-term income to the Fund from a segment of the market which remains highly resilient to the current economic slowdown. This asset will complement the overall portfolio composition of the Fund following the recent warehouse purchases in Stoke-on-Trent and Stockport.”
Jamie Phillips, Fund Manager of the CBRE UK Property PAIF, says: “Having recently secured a long lease subject to indexed reviews, we saw a good opportunity to capitalise on that success, particularly in light of the significant demand being experienced for both food stores and secure long income investments. The sale is consistent with our active management approach, but also provided an opportunity to both reduce the Fund’s retail exposure and crystallise some strong performance from the asset.”