UKCM invests in supermarket and PBSA development
UK Commercial Property REIT Limited
UKCM invests £45.7 million in long lease ASDA supermarket and student accommodation development and announces £25.4 million disposal
22 December 2020: UK Commercial Property REIT Limited ("UKCM" or the "Company"), which is managed and advised by Aberdeen Standard Investments* and owns a diversified portfolio of high quality income-producing UK commercial property, announces that it has completed the acquisition of an ASDA supermarket in Torquay, Devon, from Aviva Investors for £16.6 million, representing a net initial yield of 4.70%, rising to 5.24% in July 2021
In a separate transaction, UKCM has also agreed to forward fund the development of a strategically located purpose built student accommodation ("PBSA") asset at 41-45 Gilmore Place in central Edinburgh for £29.1 million. The purchase of land is expected to complete in February 2021, with delivery of the asset due in 2022, in time for the 2022/23 academic year.
The purchases will be funded through existing cash resources, with the Company having also disposed of the M8 Interlink Industrial Estate, Coatbridge, for £25.4 million.
The c. 33,000 sq ft supermarket in Torquay is fully let to ASDA on a long lease with an unexpired term of 15.5 years. The lease is subject to five yearly RPI linked rent reviews, with the next due in July 2021. ASDA, which is one of the UK's 'big four' supermarkets, with a 14.4%1 share of the UK grocery market has occupied the store since 2011. The store, which includes 169 car parking spaces, is in a strong location and is accessed via Regent Close off the A322 Newton Road. The property benefits from an expansive catchment area with a total population of 188,000 in the immediate vicinity, as well as limited nearby competition.
UKCM has also agreed to forward fund a new 230-bed PBSA development in Edinburgh, which will comprise over 90% en suite cluster rooms and a small number of studios, with completion expected for the start of the 2022/23 academic year. The land, which has the benefit of full planning permission for the PBSA development, is to be acquired from S1 Developments for £6.5 million with an additional capped funding commitment of £22.6 million.
The scheme is in a prime location to serve all three of Edinburgh's universities, in particular the University of Edinburgh, as well as being in close proximity to George Square and the student quarters of Marchmont and Brunstfield. The high quality design of the property also includes large common areas, music rooms and bike storage. A specialist operator will be appointed to manage the asset.
In addition, UKCM has completed the sale of the multi-let M8 Interlink Industrial Estate in Coatbridge for £25.4 million. The disposal is in line with UKCM's strategy to generate capital for reinvestment into opportunities with longer-term fundamentals.
Following these transactions UKCM remains well capitalised with £60 million of cash resources available for investment and access to a further £150 million of undrawn revolving debt.
Will Fulton, Lead Manager of UKCM at Aberdeen Standard Investments, said: "Through these acquisitions we are enhancing our income and increasing the portfolio's exposure to the alternatives sector. At the same time, this disposal is in line with our ongoing strategy to refine the portfolio and recycle capital into opportunities which offer longer term income growth potential.
"The ASDA supermarket provides access to a long leased, convenience led asset in a strong location with a growing income stream through index-linked rent reviews in a segment of retail that has proven its resilience during the COVID-19 pandemic.
"Whilst the current COVID-19 environment has created a challenging environment for students we anticipate good demand for the 2022/23 academic year and beyond. This scheme is not only in an excellent location in one of the world's leading university cities but will also offer students high quality modern accommodation with amenities."
1 Source: Statista as at October 2020, ranking ASDA as 3rd in the UK
For further information please contact:
Richard Sunderland / Claire Turvey / Eve Kirmatzis / Andrew Davis, FTI Consulting
Tel: 020 3727 1000
Email: [email protected]
Notes to Editors - UK Commercial Property REIT
UK Commercial Property REIT is a FTSE 250 Real Estate Investment Trust listed on the London Stock Exchange. It aims to provide shareholders with an attractive level of income together with the potential for capital and income growth from investing in and managing a £1.22 billion (as at 30 September 2020) diversified portfolio. The portfolio has a strong bias towards prime, institutional quality properties and is diversified by location and sector across the UK.
* The Company is managed and advised by Standard Life Investments (Corporate Funds) Limited (the Company's appointed AIFM). Will Fulton, a qualified Chartered Surveyor with 30 years of experience in the industry, has been Lead Manager since April 2015. Investors should refer to the Key Information Document prior to making an investment decision.
Further information on the Company's investment policies, the types of assets in which the Company may invest, the markets in which it invests, borrowing limits as well as details of its management, administration and depositary arrangements can be found in the Company's Annual Report and Investor Disclosure Document. The above documents are available on the Company's website www.UKCPREIT.com. Paper copies of these documents are available on request, free of charge, via the contact details outlined on the website.
Property is a relatively illiquid asset class, the valuation of which is a matter of opinion. There is no recognised market for property and there can be delays in realising the value of property assets. Investors should be aware that past performance is not a guide to future results. The value of investments, and the income from them, can go down as well as up, and an investor may get back less than the amount invested.
For further information on UK Commercial Property REIT, please visit www.UKCPREIT.com.