LondonMetric Property has acquired a triple net lease (NNN) retail asset on the Old Kent Road, in south east London, from an open-ended property fund for £38m through one of its joint ventures (LondonMetric share: £19m).
The deal reflects an initial yield on cost to LondonMetric of 5.4%, rising to 5.7% upon completion of short term asset management initiatives.
The 68,000 sq ft property, which sits on a five acre site, is let to B&Q, Pets at Home and Halfords and benefits from planning for 1,100 new residential apartments.
Simultaneous with the acquisition, LondonMetric has extended the WAULT and increased the annual rent by 54% from £1.4m to £2.1m, with 85% of the income subject to contractual rent reviews.
LondonMetric said that upon settlement of the next rent reviews and completion of other other asset management initiatives, the yield on cost is expected to increase to around 7%.
Andrew Jones, chief executive of LondonMetric, said: “This is an exceptional asset in a prime central London location where the demand for higher value alternative uses more than underpins the purchase price. The simultaneous regears and rental increases demonstrate our strong retailer relationships and high occupier commitment to retain representation in a location where de-retailing is seeing quality retail space lost to alternative uses on an almost unprecedented basis.”
Cortex Partners advised LondonMetric and Savills advised the vendor.
