Schroder Real Estate Investment Trust has bought 244 to 248D Commercial Road in Portsmouth for £7.2m – a 8.3% yield.
The property comprises a 27,400 sq ft retail parade, located at the eastern end of Commercial Road, that is let to four tenants: Sports Direct, Mothercare, Tui UK and a small jeweller, called the Gold Centre. The asset produces income of £626,750 pa and has an average unexpired lease term of 6.6 years.
Sports Direct, which trades over the ground and two upper floors, has a lease until March 2020, paying £315,000 pa, which equates to a zone A rent of £113 per sq ft or an overall rent of £17.50 per sq ft. Mothercare, which trades at ground floor, has a lease until September 2020, paying £235,000 pa, which equates to a zone A rent of £116 per sq ft.
The remaining two tenants, Tui UK and Gold Centre, pay a combined rent of £76,750 pa with lease expiries in January 2014 and November 2015 respectively.
It sits adjacent to the proposed 600,000 sq ft Northern Quarter retail and leisure redevelopment, which is being developed by Centros. It expects to submit a new outline planning application in 2014.
Duncan Owen, head of property at Schroders, said: “The company has had a very low weighting to the retail sector, which has been to its benefit over the past few years. As the economy begins to show signs of a more sustained recovery, tactical additional exposure to the retail market is now forming part of our strategy. This asset offers good flexible accommodation for retailers seeking the most convenient locations and high pedestrian footfall, with the potential for value enhancement through asset management while satisfying the company’s investment criteria by offering an attractive initial yield at affordable rents.
“Following the acquisition the company will have cash of around £14.4m and a 27% weighting to the retail sector. The company is considering a number of further accretive acquisitions and aims to report progress in due course.”
annabel.dixon@estatesgazette.com
