LONDON (ShareCast) - (ShareCast News) - Property investment company Custodian REIT announced the completion of a forward-funding agreement for a pre-let development, together with the purchase of the development land, on Friday.
The London-listed firm said it acquired 0.4 acres of land in Maypole, Birmingham, adjacent to the busy A435 Alcester Road - one of the main arterial routes into Birmingham city centre.

It said the development would comprise an 1,800 square foot drive-through coffee shop with 16 parking spaces, with construction being phased over an expected six month build period.

The unit, to be developed by Deeley Properties, had been pre-let to Starbucks Coffee UK on a 15 year lease without break, with five-yearly upward-only market rent reviews.

On completion of the development for a total consideration of £1.75m, the total passing rent would be £0.12m per annum, reflecting a net initial yield of 6.43%.

The land purchase price of £1m was funded from the company's existing cash facilities, resulting in net gearing increasing to 21.7% loan-to-value.

"The growth of drive-through stores is being driven by the likes of Costa, Starbucks and Greggs and is proving popular with retailers and customers, which is leading to rental growth in the sector," said Richard Shepherd-Cross, managing director of the company's investment manager Custodian Capital.

"The location of this property on an arterial access route for Birmingham city centre allows easy accessibility for traffic both entering and leaving the city, enhancing the site's offering."

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