AEW UK REIT has sold a high street retail asset in Portsmouth over fears that its tenant, Nationwide, was “significantly overrented”.
The REIT sold 208-220 Commercial Road and 7-13 Crasswell Street for £3.9m, reflecting a net initial yield of 9.9% and a capital value of £251 per sq ft. The sale reflected a 22% premium to June’s valuation.
The property is let to the building society, as well as Kokoro and Specsavers.
The REIT said: “The risk of the main tenant, Nationwide Building Society, being significantly overrented, prompted the decision to sell.”
It added: “The value of the asset is likely to deteriorate as Nationwide’s lease becomes shorter, with the threat of the tenant leaving on expiry in 2029 creating the possibility of a long-term void.”
Nationwide has made a promise to customers that none of its 605 branches will be closed until next year, pledging to keep open in towns until 2026 at the earliest.
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