At it again
Hardly a week goes by these days without South Somerset District Council buying another property. This time they’ve spent £4.2M investment in Centurion Mill, Exeter. It seems to go without saying that the only place SSDC avoid investing in these days, is South Somerset.
The property comprises two industrial buildings totalling 72,246 square feet on the well-established Sowton Industrial Estate, between the M5 and Exeter’s city centre. The investment will deliver a net initial yield of 7 per cent.
7% is the basic yield SSDC target, the idea being that this will generate income to pay for services. You can read much more about this policy in our lead article in our next issue published on 15th November.
The property’s principal tenant is Stovax Heating Group Limited, who are headquartered on the estate and use this unit in combination with three units immediately to the north as their main distribution centre.
Other tenants include Greggs, the largest bakery chain in the UK with more than 1,850 outlets, and Devondale Electrical Distributors Ltd, an electrical wholesaler with growing regional presence who delivered innovative green energy projects for the RSPB and Living Coasts zoo.
The Council’s Portfolio Holder for economic development including commercial strategy, John Clark, explains “With a premium location, established tenants and great value-adding potential, this property provides an excellent opportunity for us”.
As we reported last month, this is an understandable approach, but from a risk management point of view is, let us say unusual.
Any asset manager looking at handling funds on this scale, would be investing in a mixed portfolio, not putting all of their money into one sector, i.e. property.