AEW UK REIT has acquired two assets for a combined total of £18.3m. In Bath city centre it has bought a 67,020 sq ft mixed-use block for £13m. The price reflects a capital value of £194/sq ft and a net initial yield of 8.5%.
Completion of the purchase of Northgate House, which has frontages on Bath’s High Street, Upper Borough Walls and Union Passage, is expected later this week. The building’s 48,805 sq ft retail accommodation is let to 11 tenants and is anchored by TK Maxx, which recently removed a tenant break option.
Northgate House also has 18,215 sq ft of recently refurbished grade A office space, which is fully let to Regus Group for its Spaces brand until 2032.
The asset is held leasehold from Bath and North East Somerset Council for an unexpired period of 178 years at a peppercorn rent.
AEW has also completed the purchase of a freehold retail asset in Bromley for £5,300,000. The price reflects a capital value of £101/sq ft and a net initial yield of 8.7%.
The Bromley asset is located on the western side of the pedestrianised Bromley High Street and provides 54,215 sq ft of accommodation, let in its entirety to Next Holdings, which has occupied the property since 2000. In September last year, the retailer renewed on a four-year lease at a rebased level of rent.
Following the two acquisitions AEW has around £7m to deploy on other new purchases while retaining sufficient cash for working capital purposes.
Laura Elkin, portfolio manager of AEW UK REIT, said: “Over recent weeks, we have taken time to carefully consider where best value can be found and we are delighted to have acquired these high yielding retail assets both located in strong locations. The purchase prices of both assets reflect low capital values which we believe will provide excellent value to our shareholders over the long term.
“We continue to analyse a very interesting pipeline of potential acquisitions for AEWU’s strategy and, following full investment of the remaining capital available for deployment, the company’s earnings are expected to return to full cover of its dividend.”
