London-based real estate investment trust Picton Property Income has acquired a multi-let industrial estate in Gloucester.

Picton has completed the freehold acquisition of Madleaze Trading Estate on Bristol Road, from Peel Holdings to the tune of £13.1 million.

Nearby to Peel-owned Gloucester Quays Outlet Centre and The Peel Centre as well as the Gloucester and Sharpness canal, the property comprises of 18 industrial units totalling 304,000 sq ft on a 10.3-acre site.

This news follows Peel's decision earlier in the year to place Gloucester Quays on the market for £105m, in an attempt to bounce back from the turmoil of the pandemic.

The estate is currently let to eight occupiers including Corplex Plastics, Apollo Radiators, Ardem Trading, M.D.C Imports (UK) and J D R Karting. Two units on the site are also vacant, which are due to be refurbished prior to re-leasing.

The total rental income for the estate is currently £0.75 million per annum, equating to only £2.74 per sq ft. This is expected to rise to £0.86 million once fully let and has the potential to increase further as rents are reset to current market levels.

The purchase price is said to reflect a net initial yield of 6.1 per cent and a low capital value of £44 per sq ft, which is below the estimated reinstatement cost.

Picton funded the acquisition using its revolving credit facility and the proforma LTV will increase to 22 per cent post acquisition (June 2021: 21 per cent).

Michael Morris, chief executive of Picton, said: "The estate offers short-term potential for income and capital growth through leasing vacant units and capturing the upside from such a low rental base. We intend to further improve and reposition the estate to widen its appeal for new and existing occupiers."

Punchline says: This is a good move for the city of Gloucester. Picton are a big beast that cover commercial property, retail and leisure and already owns the 113,900 sq ft Gloucester Retail Park on Eastern Avenue. New blood and new money will inject some life back into a trading estate that badly needs the investment."