It is a modern purpose built retail unit in Halesowen, West Midlands, constructed in 1999, and is principally arranged on a single level together with an external garden centre and builder’s yard at either end.
The property, which has a net yield of 6.8%, comes with a long lease and a strong and stable tenant that increases the fund’s average lease length from 10.4 to 10.9 years and occupancy rate from 93.3% to 93.8%.
The purchase has also cut the cash weighting of the fund from 21.9% to 15%, something Pickup expects to reduce further as he looks to make further acquisitions in 2010.
SIG senior portfolio manager, Ryan Hughes said:
“Commercial property is once again attracting the attention of income-seeking investors keen to gain exposure to a sector offering high yields and the potential for capital growth.
The Skandia Property Fund offers that exposure through an experienced fund manager whose prudent approach over the past 24 months has left the portfolio well-placed to fully exploit the abundant opportunities in today’s market.”
Nigel Pickup, Fund Manager for the Skandia Property Fund said:
“This acquisition continues our investment programme at an attractive time following the falls in commercial property prices in 2007/2008 and marks the third purchase so far this year totalling GBP 42.75 million of new assets acquired for the Fund.
We have seen a marked change in investor sentiment resulting in net inflows of cash into the fund and therefore we are able to take advantage of the opportunities in the market and purchase prime assets at prices offering an attractive income return and where we are confident of achieving capital growth.”
“The purchase of this asset ensures consistency with the property portfolio sector strategy whilst diversifying the geographic exposure of the Fund’s portfolio.
This key attraction is the strong income profile and with the lease secured to a tenant of substantial strength.
The acquisition improves the average lease length on the Fund and helps to decrease the void rate, vital attributes when occupier demand continues to remain weak at present.”
“We are confident that this asset will enable us to build on the performance of the fund for our investors.”
