Situated in Zagreb in Croatia, this is the first industrial property to form part of the TPF International portfolio. Acquired from VMD, Tower’s partner in its Croatian office building, the property, which comprises two A-grade buildings of two floors each, is located in Žitnjak, the largest industrial node in Zagreb. It has easy access to motorways, which provide access to Slovenia, Hungary, Austria and the rest of Croatia.

Marc Edwards, CEO of Tower and a director of TPF International explains that the Zagreb property is let with a ten year lease to a manufacturer of wiring harnesses in the automotive industry, with part of its engineering division based in Zagreb. “This blue chip tenant occupies a gross lettable area of 5 755 m2, with an additional 1 020 m2 of vacant gross lettable area set aside for the lessee’s expansion.”

“This purchase is in line with TPF International’s strategy of growing its Eastern European returns by acquiring well located and well-priced assets, from off market sources, which should deliver rental growth,” says Edwards. “As a Real Estate Investment Trust (“REIT”), Tower and its subsidiaries remain focused on property net income and the sustainable growth in distributable income, however growth in the company’s tangible net asset value per share is an equally important metric for the Group.”

“New properties are being looked at by the management of TPF International, which has an independent board to Tower, however before being purchased they are evaluated in the context of the return on capital employed. The new industrial premises in Zagreb has a lease agreement, which expires on 31 August 2027. The lessee’s UK-based parent company has provided a corporate guarantee in respect of the lessee’s obligations under the lease agreement. In addition, VMD has provided TPF International with a rental guarantee in respect of the property for a 24-month period from the date of registration of transfer of the property into Tower Industrial’s name, which will cover any shortfall between actual rental income and the agreed projected rental income under the current lease agreement.

“By diversifying our overall portfolio by targeting industrial and convenience retail properties, coupled with the office premises in the portfolio, TPF International can ensure that it continues to see balance sheet growth and ongoing returns for its investors, the major one at this stage being Tower,” concludes Edwards.