The 11.91 acre Central Six Retail Park in Coventry has been bought by AEW UK Reit plc for £16,411,000 (£110 per sq ft). The purchase price reflects a net initial yield of around 11 per cent, with an anticipated reversionary yield of around 12.5 per cent. The acquisition takes AEWU close to full investment, having recently completed the sales of two of its industrial holdings in South Kirkby and Basingstoke at 87 per cent and 73 per cent above their purchase prices, respectively.
AEW UK feels the site presents opportunities to add value through active asset management by renewing current tenancies and securing new tenants on the park.
The site occupies a strategic and central location, approximately half a miles from Coventry city centre and adjacent to Coventry Railway Station and the Friargate Regeneration area.
The retail park is highly accessible and provides 148,765 sq ft of modern purpose-built retail space with parking for 635 cars. The site cover is just 27 per cent. Units are let to household name retailers including TK Maxx, Next, Boots, Sports Direct, Burger King and Poundland.
Coventry has one of the fastest growing populations in the UK outside of London. Between 2019 and 2024 it is expected to grow by 1.25% per annum, ranking the city second out of 200 in the PROMIS Centres Retail Report.
Coventry was named the UK’s City of Culture 2021, which is estimated to generate an additional £80m for the local economy.
The tenants at Central Six Retail Park have proven to be resilient during the pandemic, with rent collection rates generally being strong.
Alex Short, Portfolio Manager, AEW UK REIT plc, said: “We are pleased to have acquired Central Six Retail Park in Coventry, which has been purchased for a price that will deliver an excellent initial yield and contribute immediately to shareholder returns. The park offers further opportunity to manage the assets proactively to enhance NAV over the longer term. At present the retail warehouse sector is providing some interesting opportunities, often underpinned by alternative use value, and occupied by tenants that have shown resilience during the pandemic. We are pleased to add this asset to the portfolio and will continue to target acquisitions where we believe valuations offer the opportunity to deliver both strong income and capital performance. The Company continues to judge each asset on its own specific merits, rather than being entirely sector driven in its purchasing strategy.”