LONDON, UK: Alternative Income REIT PLC (AIRE), a UK commercial property investor, has acquired a Virgin Active leisure club in Streatham, South-West London, for £5.1 million. The deal reflects a high yield of 9.8% and a discount to replacement cost.
The company said the purchase redeploys most of the proceeds from the sale of the Mercure Hotel in Glasgow for £7.5 million, and expects to invest the rest in the first quarter of 2024.
The Streatham club, which has a 10-year lease with inflation-linked rent reviews, is fully let and guaranteed by Virgin Active. The club, which was expanded and refurbished in 2009, has a panoramic view of Greater London from its third floor gym. It is located in a affluent and vibrant area with a strong residential market and public transport links.
Simon Bennett, Chairman of Alternative income REIT plc, commented: “We are pleased to have acquired for £5.1 million the Virgin Active in Streatham, South-West London, which is a premier leisure club that is trading well in an excellent location and is let on a long lease with uncapped index-linked rent reviews. The price reflects a net initial yield of 9.8% and a discount to replacement cost. This acquisition redeploys part of the net proceeds from the Group’s disposal of the Mercure Hotel, Glasgow at a higher initial yield, and we expect to invest the remainder of the proceeds in Q1 2024.
The Board remains confident that the Group is well positioned, given its diversified and fully let portfolio that delivers secure, long-term and index-linked income flow.”
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