FTSE 250 property company, LondonMetric Property Plc (LON:LMP), announced Thursday that it had sold four retail properties from its long income portfolio for a combined sum of £22.2m, reflecting a blended net initial yield of 4.6%. It simultaneously announced the acquisition of three convenience service stations for £10.8m, reflecting a net initial yield of 4.7%.
The properties being sold included two M&S food stores In Haslemere and Ferndown, which the company sold to a local authority for £14.68m. These properties have a WAULT of 15 years.
In Leicester, a stand-alone Matalan unit was sold to private investors for £3.4 million, reflecting a net initial yield of 5.0%. The store has less than three years left to expiry and has redevelopment opportunities. Completion of this sale is expected to occur in June 2021.
And the final properties up for sale were a Boots (health, beauty and pharmacy retailer) and a SPAR (food retailer) on the Isle of Man, which were sold to a local purchaser for £4.1m, reflecting a net initial yield of 6.5%. The Boots was re-geared recently onto a new 10-year lease.
The sales will produce a £4.1m profit for LondonMetric and deliver an ungeared IRR of 11% pa since purchase. Total receipts upon completion will be 1.3% above March 2020 book value.
Separately, LondonMetric has acquired three BP/M&S convenience service stations in Brentwood, Pevensey and Lewes for £10.8m, reflecting a net initial yield of 4.7%, rising to 5.2% over five years. The portfolio is let to BP for another 16 years and generates a rent of £0.54m p.a., with fixed rental uplifts. Vacant possession value is materially above the purchase price.
It has been a busy few months for LondonMetric with the company making a number of disposals of non-core assets, many of which were acquired by the company through the May 2019 takeover of A&J Mucklow for £415m. Mucklow’s portfolio predominantly contained logistics assets in the Midlands, but also held a number of office and retail assets, which do not fit with LondonMetric’s core focus on distribution and long income assets.
Andrew Jones, Chief Executive of LondonMetric, commented, “In a zero interest rate environment, well-let real estate continues to be in demand and so we have reacted to attractive offers to monetise select assets, including further non-core properties acquired through the Mucklow deal.
“These are all good sales which, together with our latest acquisition of three quality assets let to BP, improves our income granularity, lease lengths and credit whilst providing better certainty of income growth and geographical focus.”