In line with the recently announced strategy update, the Company has acquired Springkerse Retail Park, Stirling, for £21.85 million, in an ‘off market’ transaction. The price reflects an initial yield of 9.54%.
Stirling is in central Scotland, 26 miles from Glasgow and 35 miles from Edinburgh. The Stirling Council area has a population of just under 100,000 people, which is forecast to grow at an above average rate, and draws on a primary retail catchment of 228,000. The asset is the dominant retail park in Stirling and extends to 162,593 sq. ft. across 12 units. It is let to 10 tenants and produces a passing rent of £2.23 million per annum.
The park is anchored by B&Q, with other tenants including Wren Kitchens, DFS, Pets at Home and Halfords represented on the site. The asset is expected to benefit from the intensive asset management style of the Investment Manager. The planned upgrades should improve the lettability of the two vacant units (13% by ERV), providing an opportunity to increase the income stream and drive capital value. On completion of the letting of these two vacant units, the yield is expected to rise to 10.8%.
The acquisition was funded using the proceeds from the sale of the Tesco Superstore in Prestatyn, which was sold for a 5.2% yield. The net operating income from the new acquisition is 35% higher than the rent received from Tesco, and is therefore accretive to dividend cover.
Calum Bruce, Investment Manager, commented:
“The purchase of this asset is consistent with our recently updated investment strategy of acquiring retail warehouse parks. It is our objective to recycle capital from lower yielding assets into properties which are more suited to our intensive style of asset management, and this acquisition achieves this aim.”