Joint owners Avignon Capital and Riverside Capital complete the sale of the ‘Mercor Portfolio’ to Cordatus Property Trust for £45.35m, reflecting a net initial yield of 5.35%.
The Capital complete Portfolio is made up of 33 trade counter units let on long leases to Travis Perkins. The properties are geographically diverse, spread throughout the UK in well-established locations. The total floor area is 432,292 sq ft on 41.40 acres and is therefore benefitting from a very low site coverage ratio.
Travis Perkins is a very low-risk covenant – a FTSE 250 listed company and one of the largest suppliers to the UK’s building and construction industry, operating from a national network of more than 1,900 outlets.
The portfolio was acquired by the joint owners in 2014 and at the time, the investment opportunity was to capitalise from the income growth potential as the leases included 5 yearly rent reviews.
The business plan for the portfolio has now been completed after capturing income and value growth. Two of the assets from the original portfolio were sold separately at a premium to valuation last year.
Doug Burton-Cantley, Director at Avignon Capital said: “This investment is now at the end of its business plan and we have been able to capture rental growth on each property throughout the hold period.
We have been able to take advantage of the buoyant industrial market and are pleased to post strong returns to our investors through the first of our joint ventures with Riverside Capital.
Although we have completed our business plan, opportunities can still be realised with further fixed rental increases with a secure guaranteed income stream.
Since the acquisition in 2014, Avignon has participated in further off-market transactions let to Travis Pekins, totalling £32.25m which are held in a separate portfolio.”
Sasha Stupar, Director at Riverside Capital said “This sale concludes another good investment for our investor base. The opportunity was able to deliver on the ongoing appetite for income, paying a dividend throughout the hold period and returns on exit, providing a strong overall return”
JLL and EMW Law acted for Avignon Capital and Riverside Capital and HSM acted for Cordatus.