Income-focused UK REIT, RDI has announced the completion of the acquisition of the industrial estate, Southwood Business Park for a total consideration of £26.3 million.
Situated in Farnborough (Hampshire), the acquisition reflects a net initial yield of 6.2%. The investment is in line with the company’s stated strategy to increase its exposure to assets underpinned by strong demographics and occupier demand supported by structural change.
The business park is situated within an established commercial area in Farnborough and it is conveniently located within the M3 corridor, approximately 41 miles from Central London. The nine-acre estate consists of eighteen warehouse units totalling 154 849 square feet with a low site cover of 37%. The asset is presently 91.9% occupied on a weighted average lease length of over five years to expiry. There is limited available space within competing industrial units within the surrounding area which have all demonstrated a strong track record of high occupancy, with historic demand being driven by research and development occupiers linked to the aerospace and technology sectors.
The asset currently produces a net income of £1.75 million with average rents of £12.90 per square feet. The acquisition provides an attractive near-term yield and opportunities to support medium to long-term income growth through clearly identified asset management initiatives.
“This acquisition provides us with an increased exposure to the strong performing South East industrial market, whilst achieving an attractive near-term yield of 6.2% in a competitive investment climate. Our ability to execute this transaction once again highlights our disciplined approach to enhancing the quality of our portfolio and our continued focus on delivering superior, sustainable and growing income for our shareholders” comments Chief Executive, Mike Watters.
RDI will provide further details on our progress against strategic priorities at its year end results which will be announced on Thursday, 25 October 2018.