AEW UK Long Lease REIT Plc is pleased to announce the acquisition of a nursery property in central Southampton for £2.1m, reflecting a net initial yield of 5.9%.
The property at 53 Victoria Road, was purchased by way of a sale and leaseback agreement with YMCA Fairthorne Group, a regional operation of the charity YMCA, the world’s largest youth charity. The lease arrangements provide the Group with an income stream of 25 years, from completion of the acquisition, which will increase annually in line with the Consumer Price Index. The 8,097 sq ft property comprises a modern, purpose-built nursery facility forming part of the Centenary Quay development, which has seen the addition of some 1,500 new homes since 2012.
The property is leased to AEWL on a 250-year lease from July 2010 at a peppercorn rent.
The acquisition is the second this year for AEWL using proceeds from its recently extended debt facility with Canada Life.
Alex Short, Director AEW UK Investment Management LLP, commented: “This latest acquisition provides AEWL with exposure to a growing sector of the commercial property market and improved diversification. The income stream provided by this asset, secured against this long running, well known charity, looks particularly attractive considering the high net initial yield which will be accretive to our dividend. Annual rental uplifts in line with the Consumer Price Index will provide regular income growth to our investors”.