British Land moves in on sports club racket

8th Jul 2011 07:09

Property company British Land is to buy a portfolio of freehold and leasehold racket clubs from French bank Societe Generale.British Land is paying £179m for 17 premium racket clubs, almost half of which are located within London's M25 orbital motorway. The clubs will be let on new 25-year leases to Virgin Active pending Virgin's acquisition of the Esporta business. The properties have been acquired at a net initial yield of 7.3% and an equivalent yield of 8.4% and will generate an initial annual net rental income of £13m, British Land said.The leases are subject to a fixed uplift at year five, compounded at 2.5% a year, followed by annual Retail Prices Index uplifts of between 1% and 4% for the remainder of the term. The average rent on the new leases is £8 per square foot. The acquired properties have a total of 1.7 million square feet of leisure and gym facilities spread over 380 acres of land. The purchase price represents a capital value of just over £100 per square foot."While we remain focused on our core retail and Central London office markets, this acquisition demonstrates British Land's ability to work with banks to unlock opportunities to create incremental value," claimed Chris Grigg, the chief executive of British Land. "These high quality assets will be operated by a strong, established management team and provide us with a secure and growing income stream," Grigg added. --jh