Orchard Street buys David Lloyd Leisure club for £17.6m

By Kasmira Jefford - Wednesday, September 06, 2017 12:57

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Orchard Street Investment Management has bought the freehold of a David Lloyd Leisure health, fitness and racquets club located in Newbury, Berkshire for £17.6m.

The transaction, made on behalf of a pension fund client, was structured as a sale and leaseback agreement with the tenant, and reflects a net initial yield of 4.5%.

David Lloyd Leisure Ltd, has agreed a new 30 year lease subject to annual RPI linked rent reviews.

The club, located in a prdominantly residential area two miles south of Newbury town centre, comprises over 59,000 sq ft set on a 4.5 acre site.

It was opened in December 2015 and features indoor and outdoor tennis courts, squash courts, indoor and outdoor swimming pools, spa facilities, a state-of-the-art fitness centre, a members lounge and kids club, in addition to an on-site café/restaurant and 180 visitor parking spaces.

Tom Chadwick at Orchard Street, said: “The supply of 30 year income with annual RPI reviews is very limited so we are pleased to add this first class asset to the portfolio. This latest David Lloyd facility has firmly cemented its position as the leading fitness club in the wider area, experiencing robust client demand since opening, and we have high confidence in its prospects for continued growth.”

The deal follows Orchard Street's acquisition of a Virgin Active gym on Smugglers Way, Wandsworth, in March on behalf of St James’s Place Property Unit Trust, for £12.95m. 

Mark Sheehan, managing director of Coffer Corporate Leisure, commented: "This was an excellent opportunity to acquire a purpose-built, state-of-the-art facility with the leading operator in the sector as tenant. This investment attracted many offers reflecting the strong David Lloyd Leisure covenant providing a long-term income. We are continuing to witness an outstanding appetite from investors for sale and leaseback properties in the leisure sector. Buyers like stability of trade and long-term indexed income which leisure leases often provide. These transactions provide tenants with great prospects to free up capital to reinvest into their portfolio."

Orchard Street was advised by CBRE on this transaction, while Coffer Corporate Leisure acted for David Lloyd Leisure.

kjefford@costar.co.uk 

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