David Lloyd Leisure has announced the sale and leaseback of the premium
health, fitness and racquets club, David Lloyd Newbury. The substantial
freehold property was acquired by Orchard Street Investment Management for
£17.58 million, which reflected a net initial yield of 4.5%. Coffer Corporate
Leisure acted for the seller, David Lloyd Leisure.

The
purpose-built club, which opened in December 2015, comprises over 59,000 sqft
of accommodation set on a 4.5 acre site. The premium facilities include: indoor
and outdoor tennis courts, squash courts, indoor and outdoor swimming pools,
spa facilities, a state-of-the-art fitness centre, a members lounge and kids
club, in addition to an on-site café/restaurant and 180 visitor parking spaces.
The asset’s sole tenant, David Lloyd Leisure Ltd, has agreed a new 30 year
lease subject to annual RPI linked rent reviews.

The
property is situated in a predominantly residential area two miles south of
Newbury’s historical town centre. The affluent and populous West Berkshire town
is a commuting hub with frequent train services to both Reading (17 minutes)
and London Paddington (48 minutes).

Tom Chadwick at Orchard Street, commented: “The supply of 30 year
income with annual RPI reviews is very limited so we are pleased to add this
first class asset to the portfolio.  This
latest David Lloyd facility has firmly cemented its position as the leading
fitness club in the wider area, experiencing robust client demand since
opening, and we have high confidence in its prospects for continued growth.”

Mark Sheehan, Managing Director of Coffer Corporate Leisure, commented: “This was an
excellent opportunity to acquire a purpose-built, state-of-the-art facility
with the leading operator in the sector as tenant. This investment attracted
many offers reflecting the strong David Lloyd Leisure covenant providing a
long-term income. We are continuing to witness an outstanding appetite from
investors for sale and leaseback properties in the leisure sector. Buyers like
stability of trade and long-term indexed income which leisure leases often provide.
These transactions provide tenants with great prospects to free up capital to
reinvest into their portfolio.”

Orchard Street was advised by CBRE on this
transaction, while Coffer Corporate Leisure acted for David Lloyd Leisure.