Real Estate Investors plc, the West Midlands-based property group, has unconditionally exchanged contracts to purchase 62/68 High Street, Bromsgrove, for £1.275 million in cash.
The property, which totals just under 6,000 sq ft, produces a rental income of £114,220 per annum and tenants include Boots Opticians, Thorntons, Smart Ideas and Loritas Bakery.
The acquisition represents a net initial yield of 8.45 per cent with a weighted average unexpired lease term of seven years to expiry and three years to breaks.
Paul Bassi, REI chief executive officer, said: “This is an excellent addition to our portfolio, offering scope to add further value from lease extensions and re-letting of the upper parts and unused ancillary space, which will provide us with capital growth and a strong running yield.”
Assessing the wider trading position, he went on: “More generally, the property portfolio is performing well.
“We are seeing an improved regional investment market and we anticipate further sales in the current quarter on properties upon which we have completed our asset management initiatives.
“We have several ongoing sales and acquisitions in our legal pipeline, with a healthy addition of new lettings and lease renewals from within the existing portfolio, which will enhance rental income and our average lease lengths.
“In addition, the company has significant additional capital from rental income, property sales and bank facilities to continue to grow the portfolio and generate additional rental income to support our dividend growth. while retaining a portfolio in the region of £200 million.”
He said that REI’s portfolio continued to perform well in spite of uncertainty in the marketplace.
“The impact of Brexit and the reduction in interest rates has resulted in a surge in demand for income producing real estate, and values have clearly hardened or risen, across the UK regions, and more particularly in Birmingham and the greater Midlands,” he said.