AEW UK REIT has bought a retail warehouse in Preston for £6.45m at a potential 10.7% yield.
The deal for the 59,000 sq ft Bamber Bridge shed-shop reflects a low capital value of £110 per sq ft and an net initial yield of 9.5%.
The warehouse is let to the retailer Matalan with just over nine years left on the lease. The store is one of its top 10 performing sites, as well as being the retailer’s first ever store in the UK.
The lease benefits from a 2027 rent review to the higher of open market value, or 2.5% per annum compounded, resulting in a minimum reversionary yield of 10.7%.
AEW implied that there was further potential for development. The 4.4 acre site is just 30% covered.
The REIT said there is “the potential to repurpose the unit for trade counter or industrial use, and to extend the accommodation, subject to planning, if required in future.”
