Alternative Income REIT PLC (AIRE), known for its diversified UK commercial property assets, recently announced the acquisition of the Virgin Active leisure club in Streatham, South-West London. The purchase, amounting to £5.1 million, represents a net initial yield of 9.8% and offers a cost advantage compared to building anew.

This strategic move utilises the bulk of funds from AIRE’s recent sale of the Mercure Hotel in Glasgow, which garnered £7.5 million. The company plans further investments with the remaining capital in the first quarter of 2024.

The newly acquired property, spanning over a third of an acre, has over 10 years remaining on its lease, featuring five-yearly uncapped rent reviews linked to the Retail Price Index (RPI). Currently, the property generates a rent of £390,121 per annum, which is set to be reviewed on 29 September 2024.

Fully leased to Virgin Active Health Clubs Limited, with a guarantee from Virgin Active Health Club Holdings Limited, the club is strategically located near Streatham High Road. This area is known for its dense residential population and is supported by a robust mix of shops, restaurants, and public spaces, making it an ideal location for the club.

Originally the Streatham Squash Club, the property saw expansion in 1999 and a refurbishment in 2009, including an added storey. It now encompasses 24,587 square feet over three floors, with the top floor gym offering panoramic views of Greater London. Simon Bennett, Chairman of Alternative Income REIT plc, expressed satisfaction with the acquisition, highlighting the property’s excellent trading performance and its long lease with uncapped index-linked rent reviews. Bennett reaffirmed the company’s positive outlook, citing its well-positioned, diversified, and fully let portfolio.