The Company has sold the Tesco Superstore, which forms part of Prestatyn Shopping Park, to Supermarket Income REIT. The sale price was £26.5m, which is in line with the property’s valuation as at 31 December 2020 and above the acquisition cost. The sale completed on 3 March 2021.
The Company will retain the remainder of the retail park, which extends to c. 91,500 sq. ft. across 14 units. The retail park is let to 13 tenants, with M&S as an anchor, and has asset management angles to exploit.
Calum Bruce, Investment Manager, commented:
“The sale of this asset is in line with our investment strategy and provides us with the opportunity to recycle capital from lower yielding assets into properties
The letting activity in the retail warehouse portfolio continues, with B&M upsizing from a unit of 20,000 sq. ft. into a vacant unit of 30,000 sq. ft. B&M will pay an annual rent of £400,000 and the lease will expire in 2032. This is the third time the Company has been able to accommodate B&M’s expansion on its retail parks having completed similar deals at Barnsley and Hull in previous years.
During 2020, the Company completed 17 asset management transactions which secured £2.6m of income per annum. 94% of these deals were in the retail warehouse sector. This proves that there is still tenant demand for well-located retail warehouse parks let off affordable rents.
The Company has completed a lease restructure with existing tenant AXA Insurance UK plc. The previous leases each had a tenant break option in June 2021. AXA has committed to 27,990 sq. ft. of space across three floors, including a new lease on the vacant refurbished first floor which extends to 14,208 sq. ft. AXA reduced the amount of floorspace it leases by 5,005 sq. ft. and will occupy three floors instead of five. One floor has a break option in June 2022, one has a break option in December 2023, and the largest floor is leased for a term certain of five years. The Company worked in collaboration with the tenant to identify an occupational solution which offered flexibility
The development of the 48,000 sq. ft. convenience-led retail park and petrol filling station in Haddington is progressing well, and is forecast to reach practical completion in June 2021. The retail park is pre-let to Aldi, Home Bargains, The Food Warehouse, Costa Coffee and Euro Garages.
Following the completion of the development at Coatbridge, the Company announces that it has successfully finished the construction of a pod unit for Costa Coffee at Barnsley East Retail Park. The 1,800 sq. ft. unit was pre-let to Costa Coffee who has signed a 15-year lease without break. This development secures another £72,500 of new income per annum and shows that demand remains for well-located retail warehouse parks.
The development of the two pod units at Coatbridge, Glasgow, has reached Practical Completion. The units, which extend to 1,800 and 2,750 sq. ft., were pre-let to Costa Coffee and Burger King. Costa has signed a 15-year lease with a 10-year break option, whilst Burger King has signed a 20-year lease with a 15-year break option. The two units provide the Company with an additional £160,000 of rental income per annum.
Construction has started on the 48,000 sq. ft. retail park and petrol filling station in Haddington, East Lothian.
The site, which is adjacent to several new housing developments, is 97% pre-let to national retailers Aldi, Home Bargains, The Food Warehouse, Costa Coffee and Euro Garages. One unit of 1,500 sq. ft. is available to lease, and it is anticipated that this will be let prior to the projected development completion date of June 2021.
Once completed and fully occupied, the retail park will provide the Company with additional rental income of £875,000 per annum and will have a weighted average unexpired lease term of 14.4 years, assuming the vacant unit is let for a term of five-years.
Costs to completion