AEW UK REIT has purchased freehold, mixed-use asset in York city centre for £10m, reflecting an attractive net initial yield of 9.3%.
The 99,769 sq ft asset is multi-let to five tenants. 75% of the income is received from National Car Parks (NCP), who have occupied the 297-space car park since 2005 and have a further nine years remaining on their lease. The lease benefits from a 2027 rent review which will increase rent payable in line with the Retail Price Index, uncapped, resulting in a forecast reversionary yield in excess of 10%.
The site totals 0.8 acres and is located inside the York City Wall, bordering the historic centre of the city, within the “Micklegate Quarter”. It is situated in a prominent corner position on George Hudson Street and Tanner Row, within a 10-minute walk of key visitor attractions, including York Minster, the Yorkshire Museum and the York Dungeon. York’s key retail provisions at Coppergate Shopping Centre, Coney Street, Davygate and Parliament Street are all within a 7-minute walk.
Following purchase of York, cash available for deployment in to high yielding pipeline assets is circa £15.0m.
Commenting on the purchase, Laura Elkin, Portfolio Manager of AEW UK REIT said, “We are pleased to have purchased this very well-located mixed-use asset at a day one yield that will be accretive to the Company’s earnings. Our due diligence has shown that NCP trades well from the location and we expect this to continue given the popularity of York as a destination. Completion of the acquisition marks the strategic reinvestment into higher yielding assets of capital generated from recent sales. We continue to analyse an interesting pipeline of potential acquisitions and expect to make further purchase announcements in due course, which will bring us closer to our short-term target of full deployment of capital.”
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