LONDON (Alliance News) - Schroder Real Estate Investment Trust Ltd on Monday said it has agreed to sell Victory House in Brighton for GBP36.1 million.
The actively managed trust focuses on UK real estate. It said it has exchanged unconditional contracts for the Victory House sale. The deal is to complete at the end of April, and the 84,988 square foot office building will be sold to an undisclosed institutional purchaser.
Victory House is presently let to BUPA Insurance Services Ltd and Mott MacDonald Ltd and has an average weighted unexpired lease term of 7.7 years. At present, rent on the property stands at GBP790,000 per annum, but will rise to GBP1.9 million per year in September once the free rent period expires.
Schroder REIT said the GBP36.1 million reflects a net initial yield - once the rent-free period expires - of 4.9%.
At the end of 2018, Victory House was valued at GBP34.3 million. Based on its disposal price, the property produced an ungeared total return of 10.3% per annum since it was acquired by Schroder REIT in 2005. The MSCI benchmark for that period was 5.9%.
Schroder REIT said the disposal is part of its strategy of selling lower-yield assets and realising gains from asset management.
On Thursday last week, the trust announced it is selling its Wickes retail warehouse in Basingstoke for GBP12 million on March 29.
Following the two disposals, and based on its portfolio valuation on December 31, Schroder REIT's consolidated net loan to value will drop to 21% from 27%.
"The additional cash, reduced loan to value and undrawn revolving credit facility provides Schroder REIT with the flexibility to monitor the market and consider new investment opportunities in the future," the company said.
Shares in Schroder REIT were down 0.8% at 57.06 pence on Monday.
Schroder Real (SREI)