AEW UK REIT announced the successful sale of its industrial property at Clarke Road, Milton Keynes on Monday.
The London-listed real estate investment trust said the 30,262 square foot unit was sold for £2.75m, equating to around £91 per square foot and reflecting a 6.3% net initial yield.
It said it first acquired the industrial property in October 2015 for £1.53m, or £50 per square foot, representing an 8.3% net initial yield.
Since the acquisition, the unit had been leased to FMG Repair Services, with a guarantee from Northgate Vehicle Hire.
The lease spanned 10 years, and includes a five-year tenant break option.
By securing a more robust covenant on a longer lease, AEW UK said it was able to realise a considerable profit through the sale.
The final sale price exceeded the property’s valuation on 31 December by around 6.6%, which was £2.58m, and surpassed the original acquisition price by about 80.2%.
Following the sale, AEW UK said it now had an estimated £7.5m available to invest in a promising pipeline of higher yielding assets.
It said the investments were expected to be more accretive to its earnings, further strengthening its financial position.
“Clarke Road has performed well, delivering excellent returns to AEW UK shareholders since original investment,” said portfolio manager Laura Elkin.
“The value created through completion of the new letting presented an opportunity to crystallise the asset’s strong performance, with the intention of reinvesting the proceeds into higher yielding opportunities and, as such, we expect to make further purchase announcements in the coming months.”
At 1146 GMT, shares in AEW UK REIT were down 1.41% at 93.36p.
Reporting by Josh White for Sharecast.com.
