REI swoops to land Crewe retail investment

In a significant step towards its plans to establish a portfolio under management of £200 million in the short term, Real Estate Investors plc has bought the Market Shopping Centre in Crewe from Scottish Widows for £20 million.

The deal provides the Birmingham-based, AIM-listed property group with an initial net yield of nine per cent.

This acquisition takes total acquired assets in the year to date to over £35 million and will take the REI’s current contracted rental income to £15.7 million.

Market Shopping Centre is home to tenants including River Island, Halifax, Superdrug, Brighthouse, Ernest Jones, Hutchinson 3G, Argos, Iceland, B&M, Peacocks and Poundworld. The retail space has 100 per cent occupancy.

The property produces £2,165,000 rental income per annum (gross), with a WAULT of 5.14 years to expiry and 4.35 years to break.  The market-based shopping centre incorporates 25 retail units with predominantly ground floor retail accommodation and first floor ancillary.

In total, there is 154,130 square foot of retail and ancillary accommodation, with 294 external car parking spaces.

Chief executive officer Paul Bassi said the acquisition provided significant opportunities to add value to the existing scheme.

“The acquisition is fully criteria compliant with REI’s investment strategy and operational geographical radius and provides significant opportunities to ‘add value’ through rent reviews, lease renewals and the creation of additional units on the substantial external car parking facility to increase the retail footprint of the overall site which is attractive for retailers and consumers alike,” he said.

He added that there was also scope to restructure the scheme, which would provide potential for significant capital uplift.

“We have continued to acquire criteria compliant assets during the period of uncertainty created by the European vote.

“This latest acquisition offers good opportunities to enhance performance through strategic asset management and takes our contracted rental income to £15.7 million, up 31.8 per cent since the 2015 year-end.  Additionally, we have a number of ongoing sales and acquisitions that are in our legal pipeline, or in advanced discussions, with numerous new lettings and lease renewals from within the existing portfolio, which will enhance rental income and our average lease lengths.

“REI has significant additional capital from rental income, property sales and bank facilities to continue to grow the portfolio, capitalise on the market opportunity and generate additional rental income to support our dividend growth.

“We will provide a trading update and confirm the Q1 2016 dividend in early July 2016,” he said.

REI was advised by Baldev Kang of law firm CBTC Millichips.