Custodian REIT debt finances distribution unit acquisition

By James Wallace - Tuesday, April 10, 2018 11:50

Custodian REIT has acquired a 53,198 sq ft distribution unit within Bellshill Industrial Estate in Bellshill, near Glasgow, for £3.72m.

The acquisition was funded from the company's existing debt facilities, resulting in net gearing increasing to 21.8% LTV. The unit is let to Yodel Delivery Network Limited on a lease expiring on 1 August 2025 with current passing rent of £275,000 reflecting a net initial yield1 of 6.94%. Nearby occupiers include Screwfix, DHL, Scania and TNT.

Twelve months ago, Custodian REIT entered into an agreement with Aviva Investors Real Estate Finance to provide a 15-year £50m term loan facility comprising two tranches of £35m and £15m: the £35m Tranche 1 repayable on 6 April 2032, attracting fixed annual interest of 3.02%; and

the £15m Tranche 2 repayable on 3 November 2032, attracting fixed annual interest of 3.26%.

In addition, Lloyds Bank has extended a £35m revolving credit facility, priced at 2.45% above three-month LIBOR, which expires on 13 November 2020; and Scottish Widows has provided two term loans: a £20m and a £45m facility, which mature in 2025 and 2028, respectively.

Richard Shepherd-Cross, managing director of Custodian Capital, said: “We are delighted to have secured this purpose-built parcel delivery depot on one of Scotland's prime distribution parks, let to a market leading operator.  The tenant has recently carried out significant works on the property, demonstrating its commitment to the location, and we expect to crystallise rental growth at the next review."

James Wallace is a freelance consultant and can be reached via Linkedin or email:

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