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(Alliance News) - AEW UK REIT PLC on Friday said the Secretary of State for Communities & Local Government has renewed its lease agreement on premises at Sandford House, Solihull.
The Secretary of State has occupied the entirety of Sandford House throughout the period of the company's ownership which commenced in July 2015.
Throughout its hold period, AEW said it has so far received a net income yield from the asset in excess of 9% against its purchase price of GBP5.4 million.
The real estate investment trust said the new 15-year lease agreement increases the rental income that it will receive from the property by 30% and is also expected to result in a significant value increase for the asset when the portfolio is revalued at the end of June.
The tenant intends to carry out a major refurbishment of the property over coming weeks, AEW said, requiring no capital payment by the company either by way of refurbishment cost or capital incentive to the tenant. In addition, no rent-free incentive has been granted to the tenant.
"We are delighted to have secured this highly profitable lease renewal that crystalises both income growth and value creation for the company's investors," said Portfolio Manager Alex Short.
"We continue to look for attractive purchasing opportunities that will deliver robust returns to our shareholders through the active management of our properties," added Short.
AEW shares were trading 2.2% higher in London on Friday at 72.33 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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