AEW UK Long Lease REIT makes maiden acquisition

By Kasmira Jefford - Wednesday, September 06, 2017 9:26

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AEW UK Long Lease REIT has made its first acquisition since floating in June, buying a hotel and retail unit in Swindon for £6.3m.

The 35,000 sq ft property on Princes Street, which houses a Travelodge hotel and Salvation Army centre, provides a weighted average unexpired lease term of 23 years, with a net initial yield of 5.5%.

The lease to Travelodge delivers 95% of the income received from the asset, providing AEW UK Long Lease REIT with 5 yearly rental uplifts linked to RPI.

The company has also exchanged contracts to acquire the leasehold interest in the Wet ‘n’ Wild Water Park in Royal Quays, Newcastle-upon-Tyne for £2.9m. Gerald Eve advised AEW on the Wet 'n' Wild acquisition.

The purpose built indoor water park totals 37,131 sq ft and is let to Serco Leisure Operating Ltd, a wholly owned subsidiary of Serco, for an unexpired term of 22 years with annual rental uplifts linked to RPI.The acquisition reflects a net initial yield of 6.1%. Completion of this acquisition is expected to follow within the next few weeks once assignment of the head lease has been approved.

Alex Short, Director of AEW UK Investment Management , and portfolio manager of the company said: "We are delighted to have secured our first acquisition and exchanged on a second asset. Both properties reflect our commitment to investing in sectors that are often underrepresented in institutional portfolios. The property pipeline is looking positive and we will continue to pursue attractive opportunities that are aligned with our rigorous investment approach.”

AEW UK Long Lease REIT raised £80.5m from institutional and retail investors at its IPO in June, setting out plans at the time to invest in a diverse range of sectors underrepresented in institutional portfolios including leisure, healthcare, education, hotels, student accommodation, supported living and automotive.

The company is targeting an annual dividend of 5.5 pence per share paid quarterly, once fully invested and levered, with an ambition to grow in line with UK inflation thereafter.

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