Leftfield Capital has completed its latest UK Commercial Property acquisition

Leftfield Capital and Tungsten Property Investments International have completed the acquisition of their Property VI distribution centre in Oldham Business Park, Manchester, England for a consideration £9,000,000 at a 7.74% Net Initial Yield. Strong banking relationships ensured mortgage finance of 65% Loan-to-Value at 4.80% fixed-cost finance over 5 years, delivering a positive cash flow investment. The property is conservatively projected to return a cash multiple of 1.6 - 1.8 times money invested over 5 years.

The attractive building is only 3 years old and 12m to under-sided eaves. The property boasts strong fundamentals with an excellent location, strong covenant and a Fully Repairing and Insuring lease with guaranteed minimum rental uplifts in 2015. The property was purchased below its replacement cost of £10,400,000 and presents attractive asset management and rental growth opportunities over and above the minimum uplift guarantees. The investment (details attached) is fully subscribed with £3,600,000 of equity and all investors will receive completion packs in due course detailing final outcomes of the acquisition process, share certificates, final sales brochure and signed copy of their share subscription agreements.

This acquisition takes to £60,000,000, the value of property transactions in just under 3 years.

Leftfield has been focusing on distribution warehouse assets of late. The asset class has been attracting considerable industry attention in recent months. Figures from IPD show that the UK industrial sector provides the highest income returns in a zero-capital growth market when compared against the office and retail sectors. The sector is characterised by long leases and has been isolated from the worst of the unpredictable rental dips
suffered by central London offices, where some rents have dropped from nearly £100/sq ft down to £60/sq ft. Opportunity buyers have also turned their attentions to the sector, using their access to equity and debt to buy
large portfolios. The combination of yields in excess of 7% with lower fixed cost leverage can drive up returns. US private equity firms invested in the sector over the new year. In the property press last month: 'Shortly before
Christmas, Blackstone bought two portfolios for a total of £500m from Prologis. Harbert Management Corporation also snapped up £200m of Segro's non-core UK business parks. Both Blackstone and Harbert are understood to be interested in investing further in the sector. "Against a backdrop of pretty much zero speculative development, the dwindling supply is ensuring occupiers have very limited options," said a market source. "As a result, you'll see investors looking for the good-quality stock with the prospect of adding value through regears and extensions. The sector is ready for rental growth, too." ' In addition, high inflation and low supply is driving up
replacement costs. There has also been a lot of focus on the change the Internet, with rapidly increasing bandwidth, is bringing to the distribution and retail landscapes. Technology advances are increasing roof heights of distribution centres, which has not yet filtered through to impact the underlying rental values per square foot.

The property latest acquisition will be added to the website at www.leftfieldcapital.com in the next few days.