Schroder Real Regulatory News (SREI)

10 December 2013

Schroder Real Estate Investment Trust Limited 

£7.2 MILLION ACQUISITION IN PORTSMOUTH

Schroder Real Estate Investment Trust (the 'Company') announces that it has simultaneously exchanged and completed contracts to acquire 244 to 248D Commercial Road in Portsmouth at a price of £7.2 million, reflecting a net initial yield of 8.3%.

The property comprises a 27,359 sq ft modern and well configured retail parade located at the eastern end of Commercial Road, Portsmouth's main pedestrianised retail area. The property is let to four tenants, Sportsdirect.com Retail Limited ('Sports Direct'), Mothercare UK Limited ('Mothercare'), Tui UK Limited and a small jeweller, called the Gold Centre, producing income of £626,750 per annum. The property has an average unexpired lease term, assuming all tenants break at the earliest opportunity, of 6.6 years.

Sports Direct, which trades over the ground and two upper floors, has a lease until March 2020 paying £315,000 per annum which equates to a Zone A rent of £113 per sq ft or an overall rent of £17.50 per sq ft. Mothercare, which trades at ground floor, has a lease until September 2020 paying £235,000 per annum which equates to a Zone A rent of £116 per sq ft.

The remaining two tenants, Tui UK Limited and Gold Centre, pay a combined rent of £76,750 per annum with lease expiries in January 2014 and November 2015 respectively.

Immediately adjacent to the property is the site for the proposed Northern Quarter retail and leisure redevelopment. Portsmouth City Council and the developer, Centros, are promoting a 600,000 sq ft retail and leisure development, with the proposed anchor store directly facing the property. Whilst there remains uncertainty regarding the viability of the scheme, Centros expect to submit a new outline planning application in 2014.

Commenting on the acquisition, Duncan Owen, Head of Property at Schroders, said:

"The Company has had a very low weighting to the retail sector which has been to its benefit over the last few years. As the economy begins to show signs of a more sustained recovery, tactical additional exposure to the retail market is now forming part of our strategy. This asset offers good flexible accommodation for retailers seeking the most convenient locations and high pedestrian footfall, with the potential for value enhancement through asset management whilst satisfying the Company's investment criteria by offering an attractive initial yield at affordable rents.

Following the acquisition the Company will have cash of approximately £14.4 million and a 27% weighting to the retail sector. The Company is actively considering a number of further accretive acquisitions and aims to report progress in due course."

-ENDS-

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