LONDON (Alliance News) - AEW UK Long Lease REIT PLC on Thursday said it acquired a nursery property in central Southampton for GBP2.1 million, reflecting a net initial yield of 5.9%.
The property investment trust said the property was purchased by way of a sale and leaseback agreement with YMCA Fairthorne Group, a regional operation of the charity YMCA.
The lease arrangements provide AEW UK with an income stream of 25 years, from completion of the acquisition.
The 8,097 square feet property comprises a modern, purpose-built nursery facility forming part of the Centenary Quay development. It is leased to AEW UK on a 250-year lease from July 2010 at a peppercorn rent.
"This latest acquisition provides AEW with exposure to a growing sector of the commercial property market and improved diversification," explained Portfolio Manager Alex Short.
"The income stream provided by this asset, secured against this long running, well known charity, looks particularly attractive considering the high net initial yield which will be accretive to our dividend," added Short.
AEW UK Long Lease shares were trading 0.3% higher on Thursday at 90.69 pence each.