Custodian REIT has acquired an industrial unit in Milton Keynes, for £2.1m, bringing the total amount invested since its flotation last March to £89.6m.
The 44,192 sq ft unit, on the Tilbrook Industrial Estate, is immediately opposite the 52,532 sq ft unit purchased in December 2014 on the same estate.
The property is let to Domino’s Pizza Group on a lease expiring on 10 November 2015 with current passing rent of £250,000 a year, reflecting a net initial yield of 11.25%. Domino’s has confirmed it intends to vacate the property at lease expiry.
The group has also revealed it has agreed a new loan with Lloyds Bank, which is providing a second term loan of £10m. Under the terms of the agreement, the company will pay annual interest of 1.9% above three-month LIBOR on the loan, which is repayable on 10 October 2019.
The agreed purchase price of £2.1m was funded from the company’s debt facilities, with £8.7m now deployed from the company’s revolving credit facility in addition to £20m of term debt. Total net borrowings have increased to 15.2% loan to value.
Richard Shepherd-Cross, managing director of Custodian Capital, said: “Having recently acquired an adjacent property on the Tilbrook Industrial Estate we are aware of the high demand for property in this location and took the opportunity to enhance our ownership on the estate in a competitively priced deal. Dominos intend to vacate the unit at lease expiry, following which we will undertake a comprehensive refurbishment and take advantage of what is expected to be a strong occupier market when re-letting in 2016.”