06 October 2015
DRIP REIT Set to Reach £20M Investment Milestone
Drum Property Group’s Real Estate Investment Trust (REIT), launched on the London Stock Exchange in May 2015, has completed two major UK acquisitions and exchanged contracts on a third, with a combined value of £20 million.
The Drum Income Plus REIT has completed the acquisition of the Duloch Park retail park in Dunfermline for £4.5 million and Mayflower House office complex in Gateshead for £2.67 million, with contracts exchanged on Gosforth Shopping Centre in a deal worth £12.25 million.
Following the three acquisitions, the REIT portfolio will have an average purchase yield of 8.05% with a year one cash on cash return of 10%. The portfolio now delivers an annual gross rent of £1.56 million, with 96% occupancy across the office and retail sites.
The REIT started trading on the Main Market of the London Stock Exchange on 29 May, having already raised £30 million in private first-round funding.
Welcoming the first tranche of investment opportunities, Drum’s Managing Director Graeme Bone said: “We have had a very productive four months since listing. All three purchases reflect our investment targets of commercial property assets in strong regional locations across the UK valued between £2m and £15 million, taking advantage of a lack of competition in this market.
“We are exactly where we want to be at this stage of the REIT’s development. With a strong investment pipeline already identified, we anticipate undertaking further equity issues which – together with debt finance to our target gearing levels – will support and drive the growth of the business and provide healthy returns for shareholders.”
Duloch Park, Dunfermline
The REIT is set for further growth with a strong UK regional pipeline in place including an industrial park in central Scotland, office buildings across in the North and South West England and retail developments in the Midlands.
Looking forward to future expansion, Drum's Investment Director Bryan Sherriff added: “Moving forward, the REIT will continue to target commercial property assets in strong regional locations that offer identifiable asset management and risk-controlled development opportunities.
"Our team has extensive experience of entrepreneurial and proactive asset management and of creating investments that deliver leading revenue and capital appreciation. We intend to follow an asset management strategy that will drive rental growth and maximise additional income opportunities, offering investors an attractive blend of income return and capital growth.”
The Board of the Drum Income Plus REIT comprises John Evans (Chairman), formerly of Aberforth Partners, Hugh Little (Chair of Audit Committee) formerly of Aberdeen Asset Management and Alan Robertson (Director) of Jones Lang Lasalle.