SEGRO has announced that it will take full control of its Heathrow Bog Box Industrial & Distribution Fund joint venture with M&G.
The Fund was formed as a 50/50 joint venture between Brixton PLC and M&G Real Estate in 2004 to own two assets in the vicinity of Heathrow Airport: Axis Park and Heathrow Corporate Park. SEGRO acquired the interest as part of its takeover of Brixton PLC in 2009.
SEGRO will take full ownership of Axis Park which is valued at £144.9m, while M&G Real Estate will take full ownership of Heathrow Corporate Park at a value of £118.7m. In addition, SEGRO will sell HCH House in Poyle to M&G Real Estate for £15.0m. All three assets will be sold at prices in line with December 2014 book values. The transaction is expected to complete before the end of June 2015.
Axis Park comprises 60,942 sq m of warehouse space across six units next to junction 5 of the M4 and junction 15 of the M25 motorways, approximately five miles north-west of Heathrow Airport. Royal Mail Group is the largest tenant, occupying approximately 42,000 sq m of the Estate. The vacancy rate at 31 December 2014 was 5 per cent, reflecting a single empty unit, and the weighted average lease length to earliest of break or expiry is 5.8 years. The property generates annualised net rent of £7.5m and the purchase price reflects an EPRA net initial yield of 5.0 per cent and a true equivalent yield of 5.4 per cent at 31 December 2014.
Heathrow Corporate Park consists of approximately 50,300 sq m of warehouse space across 13 units, around two miles from Heathrow Airport. The asset is fully let and the average lease length to earliest of break or expiry is 4.6 years. The property generates annualised net rent of £6.9m and the sale price reflects an EPRA net initial yield of 5.5 per cent and a true equivalent yield of 5.4 per cent at 31 December 2014.
HCH House is a 5,700 sq m building let to Heathrow Cargo Handling until November 2021. The property generates annualised net rent of £900,000 and the sale price reflects an EPRA net initial yield of 5.6 per cent and a true equivalent yield of 5.5 per cent at 31 December 2014.
SGRO : SEGRO and M&G divvy up Heathrow jv