AEW UK REIT plc has announced the acquisition of the PRYZM Nightclub in Cardiff for a purchase price of £3,625,000 / £92 per sq ft. The purchase price reflects a net initial yield of 8%, with an anticipated reversionary yield of circa 9%. The acquisition is accretive to EPRA EPS and, following the recent acquisition of Central Six Retail Park in Coventry for £16,411,000, takes AEWU gearing in line with the target of 30-35%.
The acquisition demonstrates the Manager’s view that there continue to be interesting opportunities to acquire assets that provide strong income yields to support the consistent dividend payment. The asset presents the opportunity to drive income return through the term of the tenancy to reversion.
The property is located in a strong pitch in Cardiff city centre, in close proximity to the Principality Stadium and St David’s Shopping Centre, and prominent within the leisure and late-night district. It provides 39,469 sq ft of nightclub and bar accommodation. The property is single-let to a subsidiary of Rekom UK (formerly The Deltic Group), operating as “PRZYM” and “Steinbeck & Shaw”, providing over 14 years unexpired term. Rekom UK is one of the largest specialist late-night operators in the UK with 46 clubs and bars across a number of brands including PRYZM, ATIK and Bar & Beyond. Cardiff University and the University of Wales are located approximately 300m from the property, contributing to the total student population of circa 75,000.
Alex Short, Portfolio Manager, AEW UK REIT plc, commented: “We are pleased to have acquired the PRZYM Nightclub in Cardiff following the removal of Covid restrictions in Wales permitting the reopening of leisure facilities. It has been purchased for a price that will deliver a strong initial yield which will be immediately accretive to shareholder returns, and the tenant is up to date with its rental commitments despite the disruption to trade caused by the pandemic. The property is well located and demand for leisure assets remains robust with a limited number of large capacity venues available. We are pleased to add this asset to the portfolio and will continue to target acquisitions where we believe values offer the opportunity to deliver both strong income and capital performance.”