Custodian REIT PLC (LON:CREI) said it had completed a forward funding agreement and purchased the land for a pre-let development.
The investment trust said it has acquired 0.6 acres of land in Nottingham adjacent to the Castle Marina Shopping Park and near to the recently developed NG2 Business Park on the A453 Queens Drive, the main route into Nottingham city centre from the south.
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Custodian said the development will comprise a 2,163 square foot drive-through coffee shop with 34 parking spaces, with construction to be phased over an expected six month build period. The development has been pre-let to KBeverage Limited (trading as Starbucks Coffee) on a 20 year lease, without break, with five yearly upward only market rent reviews.
On completion of the development for a total consideration of £1.725mln, the total passing rent will be £115,000 per annum reflecting a net initial yield of 6.67%.
The £900,000 purchase price of the land will be funded from the company’s existing cash resources.
"Demand for drive-through stores continues to show growth, especially in the hot beverage market, and is proving resilient in the face of the [coronavirus] pandemic. The location of this property on an arterial access route for Nottingham city centre allows easy accessibility for traffic both entering and leaving the city, enhancing the site's offering", said Richard Shepherd-Cross, managing director of Custodian Capital, the firm’s discretionary investment manager.
Shares in Custodian REIT were 0.7% higher at 87.1p in late-morning trading on Wednesday.