With annual results set to be announced on March 14, Real Estate Investors, the AIM-listed plc, has agreed two new purchases in Wythall and West Bromwich totaling £10.45 million.
The investment property in Wythall has been acquired £2.45 million in cash, producing total rental income of £243,547 per annum at a net initial yield of 9.39 per cent.
It is a modern two storey office building of 21,294 sq ft with 117 car parking spaces.
The property is well located in a strategic position on the southern side of Birmingham, close to junction 3 of the M42, with access via the A435.
The building is high specification office building which is fully let to Grafton Group (UK) plc on three leases with a weighted average unexpired lease term (WAULT) at purchase of six years and five months.
Since taking the first lease in 2013, the company has expanded to occupy the whole building on a current rental of £243,547 per annum.
Paul Bassi, CEO of REI, said: “This is an excellent addition to our growing portfolio and provides immediate income at a purchase price that we feel offers good prospects for capital growth.
Additionally, West Plaza, 144 High Street, West Bromwich, has been purchased for the sum of £8 million from BW Estates.
The 11 storey, 87,929 sq ft building is next to Metro Court, a 26,000 sq ft office building which REI acquired in December 2008.
West Plaza’s single largest tenant is Premier Inn, part of Whitbread plc, with an 85 bedroom hotel occupying six floors, comprising 48,551 sq ft at a current rent of £310,000 with a rent review due in April 2016. Total rental income is £656,050, with an estimated rental value of £712,918.
Occupancy is 91.6 per cent with the remaining vacant space currently under offer.
Paul Bassi said: “With REI already owning Metro Court, it made sense to acquire West Plaza and capitalize on the marriage value and residential potential.
“These acquisitions are a quality addition to our portfolio, providing strong rental stream from quality occupiers that will support the Company’s intention of implementing a progressive dividend policy.
“We have a very healthy pipeline of criteria-compliant additional acquisitions that are either in legals or in advanced negotiations.”