AEW UK Long Lease REIT buys Chiswick gym for £2.2m

AEW UK Long Lease REIT has announced that it has bought a gymnasium investment in Chiswick, West London, for £2.2m.

The 5,918 sq ft purpose-built gym is situated over two levels and forms part of a larger residential based development at 500 Chiswick High Road. The asset is held on a virtual freehold basis and is leased to Snap Fitness for a term of 15 years to expiry with no breaks and provides 5 yearly inflation linked reviews. The transaction reflects a net initial yield of 5.5%.

The property benefits from its location in Chiswick, an affluent London suburb approximately 6 miles west of central London. It is situated on the corner of Chiswick High Road and Chiswick Road, a 5 minute walk from both Chiswick Park and Gunnersbury stations, providing access to both the national rail network and London Underground. The surrounding area comprises a mix of high-end residential and retail accommodation.

Alex Short, Director of AEW UK Investment Management LLP, and Portfolio Manager of AEW UK Long Lease REIT said: “This new acquisition in an affluent London location is a fantastic addition to our portfolio, with its 15 years of guaranteed inflation linked income. The central Chiswick location should help to drive demand both for the current use and for alternative uses in the future, therefore helping to ensure the long term preservation of investor’s capital.”

The transaction increases the total amount invested by AEW UK Long Lease REIT plc since listing to c £95m. In addition to this, the Manager has a further 2 assets under offer and expects to make additional announcements in the coming weeks.

AEW UK Long Lease REIT plc raised £80.5m from institutional and retail investors at its IPO in June and at that time it stated its expectation to substantially invest the net proceeds within nine months of listing. On the 8 January 2018, the Group announced that it had entered into a new £30 million term loan facility with Canada Life Investments. The term facility is up to 35% loan to property value, provided on a portfolio basis.

The Company is targeting an annual dividend of 5.5 pence per share paid quarterly, once fully invested and geared, with an ambition to grow in line with UK inflation thereafter.

The Company entered the REIT regime with effect from 13 October 2017 following the submission of the application to HM Revenue and Customs.