LONDON, UK: Picton Property has completed the freehold acquisition of Madleaze Trading Estate, located in central Gloucester for £13.1 million.
Adjacent to Gloucester Quays Retail Park and the Gloucester and Sharpness canal, the property comprises 18 industrial units totalling 304,000 sq ft on a 10.3 acre site. The estate is let to eight occupiers and currently includes two vacant units, which are to be refurbished prior to re-leasing.
The total rental income is £0.75 million per annum, equating to only £2.74 per sq ft. This is expected to rise to £0.86 million once the estate is fully let and has the potential to increase further as rents are reset to current market levels.
The purchase price reflects a net initial yield of 6.1% and a low capital value of £44 per sq ft, which is below the estimated reinstatement cost.
Picton Property has funded the acquisition using its revolving credit facility and the proforma LTV will increase to 22% post acquisition (June 2021: 21%).
Michael Morris, Chief Executive of Picton Property, commented: “The estate offers short-term potential for income and capital growth through leasing vacant units and capturing the upside from such a low rental base. We intend to further improve and reposition the estate to widen its appeal for new and existing occupiers.”
Picton Property, established in 2005, is a UK REIT. It owns and actively manages a £702 million diversified UK commercial property portfolio, invested across 46 assets and with around 350 occupiers (as at 30 June 2021).
Through an occupier focused, opportunity led approach to asset management, Picton aims to be one of the consistently best performing diversified UK focused property companies listed on the main market of the London Stock Exchange.