DTZ Investors has exchanged contracts to buy a pair of retail parades in Clapham Junction for 25% over the asking price.
The investment manager has agreed to pay Alterity Investors £41.5m for 10 shops and 20 flats at 48-76 St John’s Road, SW11.
The adjoining parades total 30,543 sq ft of commercial space and 13,396 sq ft residential. They generate £1.2m in retail rent and a further £401,143 pa in residential rent.
The price reflects a 3.5% yield.
Tenants include NatWest, Waterstones, Ryman, Claire’s, Recipease, Three, Gibson Young Solicitors, British Heart Foundation, Clarks and Brook Street.
The weighted average unexpired lease term is over eight years.
DTZ is expected to target a residential conversion of part of the scheme currently occupied by Gibson Young.
The law firm has agreed to an early surrender on its September 2015 lease, offering the potential to create a pair of three–bedroom flats.
The existing flats – which are privately let – command rents of between £15,000 pa for a one-bedroom and £27,000 for a three-bedroom home.
Seventeen of the 20 flats are let, with the final three recently launched to market following their completion in July 2014.
DTZ fund manager Tony Brothwell said: “This acquisition gives exposure to good-quality retail in an affluent London suburb where we see strong rental growth potential.”
CBRE advised DTZ Investors; Green & Partners acted for the vendor.
