Real estate investment company Custodian Property Income Reit has bought family property company Scorpion Properties Limited for £8.5mn.
The deal provides Custodian with a complementary portfolio of five single-let industrial properties with 100 per cent occupancy.
With an average lot-size of £1.7mn, the assets are located in the south midlands and generate an annual aggregate passing rent of £0.6mn, adding around 1.3 per cent to the company’s annual rent roll.
Custodian Property Income Reit chairman, David MacLellan, said: “The addition of the Investment Portfolio will provide further reversionary potential to drive future earnings.
“With three similar all-share or majority-share acquisitions now announced, this innovative strategy targeting family held property holdings is proving its worth as an effective way to achieve scale.
“The around 20 per cent increase in the company’s share price since October last year makes these types of transactions more appealing.
“Long-established family-owned businesses find the investment manager’s expertise in property, combined with the attractiveness and simplicity of owning property via listed shares which deliver a high, consistent quarterly dividend, very compelling.”
Custodian said the investment portfolio comprises four vehicle accident centres let to an automotive repair business, and one unit let to a car part distributor.
Custodian Capital Limited managing director, Richard Shepherd-Cross, added: “Scorpion adds another high quality and complementary portfolio to our asset base and is a further demonstration of our commitment to generating shareholder value through disciplined consolidation.
“We believe many other family property companies face similar succession and tax issues in the UK.
“The listed Reit structure offers a tax efficient solution for the sellers, extinguishing the latent chargeable gains and potentially deferring the crystallisation of a latent capital gain, whilst obtaining a more liquid and easily tradeable investment.”
tom.dunstan@ft.com
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