LondonMetric Property has sold its Morrisons food store in Loughborough to an unnamed UK pension fund for £32.5m, reflecting a net initial yield of 4.25%.
LondonMetric acquired the asset for £16.8m in 2010 at a yield of 5.72% and recently completed a comprehensive refurbishment and 12,000 sq ft extension at a cost of £7.9m. Morrisons subsequently entered into a new 25-year lease in January 2017 on the extended 55,000 sq ft store at an annual rent of £1.5m, with contractual RPI uplifts.
The sale will complete in March 2018 at a price 11% above last reported book value and crystallises a profit on cost of 26%.
Andrew Jones, chief executive of LondonMetric, said: “The lease regear and extension at Loughborough demonstrates our ability to partner with retailers to create value through our asset management and development capabilities.
“This is a very good asset that has generated attractive income and capital returns and the pricing reflects the strong institutional demand for long let income with guaranteed income growth.”
LondonMetric was advised by Wilkinson Williams. Allsop advised the purchaser.
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