Property overview

Castlegate Business Park, Dudley & Opus Aspect, Birmingham

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£5,960,000
Aug 2013

Franck-Steier Price has recently completed two long-let, development fundings for clients of Custodian Capital, a subsidiary of Mattioli Woods plc.

The properties comprises a new 63 bed hotel let to Premier Inn Hotels on Castlegate Business Park in Dudley and a new 17,700 sq.ft high specification industrial unit let to West Midlands Ambulance Service on Opus Aspect in Birmingham.

The hotel is let to Premier Inn Hotels Ltd on a full repairing and insuring lease for a term of 25 years from July 2013 at a rent of £239,400 per annum.  The lease is subject to five yearly rent reviews to compounded CPI capped at 5% per annum.  Premier Inn has an option to break the lease in the 20th year.

The industrial unit is let to West Midlands Ambulance Service NHS Trust for a term of 20 years from July 2013 at a rent of £151,483 per annum.  The lease is subject to five yearly rent reviews to compounded RPI capped at 2.50% per annum.

The combined purchase price was £5.96 million which reflected a blended net initial yield of 6.20%, after purchaser’s costs at 5.80%.

The Premier Inn was developed by Stoford Developments, represented by Gerald Eve, and the Ambulance Service unit was developed by Opus Land, represented by Jones Lang Lasalle.

Ben Blackwall, Director at FSP, comments; “In a market where the risk of tenant default is still a very real possibility the focus of many investors is on secure income streams with fixed growth throughout the lease term.”

Richard Shepherd-Cross of Custodian Capital added; “Both investments provided long-term income, secured against undoubted covenants which where ideal for the pension and wealth management clients of Custodian Capital.”