UBS Asset Management’s (UBS-AM) Real Estate & Private Markets (REPM) business has completed the acquisition of a Sainsbury’s supermarket in Hinckley, Leicestershire, for c. GBP 45 million.
The property was bought on behalf of the UBS Long Income UK Property Fund (UBS-LIF Property, the Fund), and is let to Sainsbury’s on a long-term lease running to 2041.
Constructed in 2015, the asset comprises 105,000 sq ft of modern purpose-built supermarket accommodation, along with approximately 550 parking spaces on the 3.82 acre site. The property is let to the UK’s second largest supermarket brand on a long-lease, with an unexpired term of 21.4 years, subject to five-yearly uncapped RPI upwards-only rent reviews. This acquisition, which is fully in line with UBS-LIF Property’s investment strategy, further diversifies the tenant mix within the Fund, while supporting its distribution yield and enhancing the portfolio’s WAULT.
Strategically located in the town of Hinckley, 15 miles south-west of Leicester and 25 miles east of Birmingham, the store benefits from a large affluent catchment and is the dominant supermarket in the area. Situated in a prominent position off Rugby Road, one of Hinckley’s main thoroughfares connecting the town centre and the M69, the supermarket sits adjacent to an 80,000 sq ft mixed-use retail and leisure development known as The Crescent, and capitalises on the high footfall generated by the local area.
“This acquisition offered the opportunity for the Fund to gain exposure to the UK’s supermarket sector. The move has proved particularly opportune against the backdrop of the sector’s resilience throughout the Covid-19-related volatility. Sainsbury’s represents an excellent covenant. The UK’s second largest supermarket brand aligns with the Fund’s strict long-lease tenant criteria, allowing us to distribute stable, long-term indexed cashflow to our investors,” commented Gijsbert van Riemsdijk, Head of Transactions Europe ex CH at UBS-AM Real Estate & Private Markets.
UBS-LIF Property targets a net income return of 5% p.a. and offers investors the opportunity to access a portfolio of long-lease assets benefitting from indexed rental increases.
GCW acted for UBS-AM and Cushman & Wakefield and Prime Retail acted for the vendor.