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New deal for REIT

Ediston acquires Newcastle office block

CitygateEdiston Property Investment Company has acquired Citygate, a modern office building in Newcastle, for £18.95 million (net of acquisition costs) from Hanro.

The purchase reflects a net initial yield of 6.57% and will be funded from a combination of cash resources and an increase of £12.42m in the existing debt facility with Aviva Commercial Finance at an all-in rate of 2.95%.  The loan-to-value ratio of the company’s property portfolio following this acquisition will be 29.01%.

Citygate provides 63,524 sq ft of modern office accommodation with 70 car parking spaces.  It is let to three tenants EY, UNW and N+D (London), guaranteed by Grainger, and has a weighted average unexpired lease term of more than six years.  Around 89% of the income benefits from upward-only rent reviews in 2017, with the remaining 11% being reviewed in 2018.

As a result of this acquisition, the thirteenth since the Edinburgh-based real estate investment trust launched in October 2014, the company is almost fully invested.

Calum Bruce, director of investment at Ediston Properties, said: “It is our aim to enhance the portfolio by purchasing regional office buildings which offer solid income streams as well as reversionary potential in the short term.

“Citygate fits the brief.  It is well placed to capitalise on the rental growth forecast to materialise in the city, owing to the favourable supply-demand balance.”

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