Schroder Real Estate Investment Trust has bought a 50% interest in The University of Law campus in Bloomsbury, London, for £34m.
The company is acquiring the property alongside Schroder UK Property Fund, also managed by Schroder REIT, for a total price of £68m. The price reflects a net initial yield of 4%.
The deal follows the raising of £27m by Schroder REIT from a placing of 47 million shares at an issue price of 57.5p per share. The placing was completed at a premium to the last reported net asset value.
The property has been acquired from The University of Law which has entered into a new 12-year lease without tenant breaks at a rent of £2.9m a year, with the company’s 50% share representing rental income of £1.43m a year. The lease benefits from five yearly, upwards only rent reviews. The current rent equates to £33.43/ sq ft.
The freehold property comprises two parcels of land totalling 0.8 acres on which there are four buildings totalling 85,814 sq ft with a mix of office and D1 educational planning use
This is the ninth acquisition completed by the company since it began its growth strategy in December 2013. Over this period, the Schroder REIT has invested £120m at an average initial income return of 6.6% with an average unexpired lease term of 8.7 years.
Duncan Owen, head of Real Estate at Schroders said: “It is the third time this year that placing proceeds have been efficiently deployed in line with the company’s strategy of targeting investments with strong fundamentals in a good location. The acquisition of four buildings on two freehold parcels of land presents both a future opportunity to intensify and change use whilst also benefiting from an inflation linked rental stream.”