In December 2011, we acquired a portfolio of nine freehold and long leasehold properties from a consortium including a subsidiary of Caledonia Investments plc and Buccleuch Property in an off-market transaction for a total cash consideration, including all costs, of £39.8 million (the “Edinmore portfolio”).
The annual rent roll is approximately £4.2 million representing a net initial yield of 10.6%. The portfolio has a weighted average lease length of 4.2 years with 89% occupancy. This high yielding portfolio has a good spread of risk and offers considerable upside from both lease re-gears and development opportunities. It fits well with our strategy of acquiring assets with strong existing cash flow to which we can add further value.
We are already well advanced with a number of asset management lease initiatives on the portfolio and the valuation as at 31 March 2012 is £41.8 million, producing a 4.5% valuation increase in four months, which underlines what we think is an excellent acquisition for the Group.
Summary of Edinmore Portfolio
Ashby Park, Ashby de la Zouch
Three office freehold buildings totalling 95,000 square feet let to three tenants, Alstom Power, Findel Education and Hill Rom Limited, with a total rental income of £1,059,000 pa. There is also a 3 acre development site.
Norfolk House, Birmingham
A 115,000 square foot freehold building consisting of 89,000 square foot of office space with the balance being retail space and is located next to the Bull Ring in Birmingham City centre. It should benefit from the nearby redevelopment of New Street Station. The current rental income is £950,000 pa.
Watt Place, Hamilton International Technology Park, Blantyre
A 34,300 square foot freehold industrial unit let to motor vehicle component manufacturer, CTS Corporation UK Limited on a lease expiring in February 2016. The current rental income is £189,000 pa.
Compass House, Dundee
A 30,500 square feet heritable office building in Dundee’s prime waterfront location that is let to The Scottish Ministers until March 2019. Total rental income is £380,000 pa.
Witham Park House, Lincoln
A former factory divided into three separate freehold blocks and converted into 101,000 square feet of offices. The majority of the building is let to Lincolnshire County Council with lease expiry dates ranging from 2012 to 2018. Current rental income is £585,000 pa.
Charles House, Northampton
A 28,600 square foot freehold building built over 5 floors all let on a number of short leases. Current rental income is £194,000 pa.
Tollgate Business Park, Stafford
A 55,000 square foot freehold industrial/office building let to Elster Metering until April 2015 at £291,000 pa.
1 Cotham Street, St Helens
A 41,600 square foot freehold building let to Wilkinsons at £466,000 pa and purpose built for them with a lease expiry in October 2015.
Network House, Wolverhampton
A 33,300 square foot freehold building consisting of 14,000 square feet of offices and 19,300 square feet of retail space. The existing office accommodation is currently vacant, however, the property offers a redevelopment opportunity. Current rental income is £113,000 pa.