UK property investor Custodian REIT PLC (LON:CREI) has broadened its portfolio with the acquisition of eight properties from Menzies Distribution Limited (MDL) for £24.7mln.
MDL will become the REIT’s largest tenant through the sale-and-leaseback deal.
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The eight 'last mile' distribution properties have a passing rent of £1.61mln and are being leased back to MDL for 10 years.
Richard Shepherd-Cross, the portfolio manager, said the leaseback gave the property group a “strong tenant covenant” representing 3.9% of the rent roll.
Custodian specialises in smaller property units and Shepherd-Cross said the acquisition will help to regionally diversify Custodian’s portfolio and provide secure cash flow with the certainty of rent hikes in 2024.