TIDMSREI
RNS Number : 0366T
Schroder Real Estate Inv Trst Ld
22 November 2021
For release 22 November 2021
Schroder Real Estate Investment Trust Limited
("SREIT"/ the "Company" / "Group")
SREIT INCREASES INDUSTRIAL EXPOSURE WITH GBP20 MILLION PORTFOLIO
ACQUISITION
Schroder Real Estate Investment Trust, the actively managed
UK-focused REIT, announces the acquisition of a portfolio of four
industrial assets in the north west of England. The purchase price
of GBP19.85 million reflects a net initial yield of 6.9% and a
capital value of GBP53 per sq ft.
Valley Road Industrial Estate, Birkenhead
Unconditional contracts have been exchanged to acquire Valley
Road Industrial Estate in Birkenhead, for GBP11.4 million,
reflecting a net initial yield of 6.8%, a reversionary yield of
7.8% and a low average capital value of GBP60 per sq ft. The 10
acre estate comprises 190,000 sq ft of warehouse space and
ancillary offices across 15 units, of which 41% by area have been
recently refurbished.
The estate is located close to Junction 1 of the M53 and
features a manned secure access, low site cover and good
circulation. With an EPC rating of C, it offers the opportunity to
improve sustainability credentials through initiatives including
upgrades to LED lighting, installation of PIR sensors and
improvements to insulation.
The estate is let to seven tenants generating a combined rent of
GBP830,000 per annum, reflecting a low average rent of GBP4.36 per
sq ft. This compares with an ERV of GBP950,000 per annum, or
GBP4.99 per sq ft. Tenants include KPFF Limited, a frozen food
distribution production company, at GBP300,000 per annum or 36% of
total income; Balfour Beatty, an international infrastructure
company, at GBP247,200 per annum or 29% of total income; and Park
Retail, a gift and voucher distribution company, at GBP85,910 per
annum or 10% of total income. The weighted average unexpired lease
term is 4.3 years to earliest termination and approximately 10% of
the estate is vacant, where the refurbishment has just been
completed and where there is a 12 month rental guarantee. The
majority of this space has good tenant interest.
Coral Products, Haydock Industrial Estate, Haydock
Acquisition of a 98,551 sq ft manufacturing and recycling
facility on Haydock Industrial Estate, which is leased to Coral
Product (Mouldings) Limited ("Coral"). The purchase price of GBP4.9
million reflects a net initial yield of 6.6% and a low capital
value of GBP49 per sq ft. Coral, who were recently acquired by a
subsidiary of the Canada-based IPL Plastics Group, occupy the
entire site on a lease expiring in January 2031, with a tenant
break in 2026, at a rent of GBP340,000 per annum or GBP3.45 per sq
ft. This compares with an ERV of GBP394,000 per annum or GBP4.00
per sq ft. The asset is well located with direct access to the A580
(East Lancashire Road) and in turn the M6 motorway.
The unit benefits from a new roof across the majority of the
buildings. The tenant is understood to be committed to the site due
to recent investment and the recycling licence, but there may be
potential to acquire adjoining sites and pursue a longer-term
redevelopment strategy.
Newfield Fabrications, Sandbach, Cheshire
Acquisition of two assets let to Newfield Fabrications
("Newfield"), a steel fabricating business established in 1965, for
a combined GBP3.6 million, which reflects a net initial yield of
7.4% and a low capital value of GBP42 per sq ft. Both assets are in
an established industrial area in Sandbach, Cheshire, approximately
three miles from junction 17 of the M6.
The first asset comprises a 77,880 sq ft manufacturing and
distribution facility on a 4.1 acre site, let on a 13.9 year term
at a rent of GBP247,000 per annum, or GBP3.17 per sq ft. The lease
benefits from five yearly rent reviews linked to the retail price
index ("RPI"), subject to a minimum increase of 2% per annum and a
cap of 4% per annum. The facility has an EPC rating of C and
features photo-voltaic panels.
The second asset comprises an 8,000 sq ft industrial unit with
main road frontage, also let for 13.9 years at a rent of GBP36,000
per annum, or GBP4.50 per sq ft. The lease also benefits from five
yearly rent reviews linked to the RPI, subject to a minimum
increase of 2% per annum and a cap of 4% per annum. The property
has an EPC rating of C.
The portfolio acquisition, to be funded by drawing on the
revolving credit facility, generates additional rent of GBP1.45
million per annum which is consistent with the stated strategy of
growing net income, with the potential for this to be increased
further through active management and the embedded reversion. The
acquisition increases SREIT's industrial weighting, based on the
last published independent valuation as at 30 June 2021, from 40.2%
to 42.7%, with the majority of this by value comprising good
quality multi-let estates.
Following completion, SREIT's net loan to value, adopting the
last published independent valuation, will be 34.7%, with cash of
GBP11.8 million and remaining undrawn loan facilities totalling
GBP6.8 million.
SREIT announces its interim results for the six month period to
30 September 2021 on 23 November.
-ENDS-
For further information:
Schroder Real Estate Investment Management
Limited:
Nick Montgomery / M atthew Riley 020 7658 6000
FTI Consulting:
Dido Laurimore / Richard Gotla / O
llie Parsons 020 3727 1000
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