Tritax Big Box REIT has announced that it has completed the land purchase and entered into contracts to provide forward funding for the development of a new regional distribution facility, pre-let in its entirety to TJX UK (“TK Maxx”), a major retailer of branded apparel and home fashions in the UK and Ireland. The investment price is £59m, reflecting a yield of 5.32% (net of land acquisition costs).
The site, in Knottingley, Wakefield, is located at the junction of the M62 and A1 directly off the J33 roundabout, providing good access to Leeds, Manchester and the ports of Liverpool and Hull. In addition, the new distribution facility is expected to benefit from the planned lane expansion on the M62 between West Yorkshire and Manchester and from the upgrading of long stretches of the A1 to motorway status by 2017. The region has attracted major occupiers, such as B&Q, Next, The Range and ASDA, which underpins the longevity of the area as a major UK distribution location.
The new distribution facility will comprise a gross internal floor area of approximately 635,000 sq ft., with an eaves height of approximately 17 metres, a low site cover of c.40% and will accommodate the installation of three mezzanine floors that will create an additional c.765, 000 sq ft. of useable space.
Upon practical completion, the property will be leased to TK Maxx on a new 20 year lease, subject to five yearly upward only rent reviews indexed to the Retail Price Index, providing a minimum 1% pa rental growth (capped at 3% pa). During the construction phase, the Company will receive an income return equivalent to the rent from the developer.
The development is being undertaken by Caddick Developments Limited and guaranteed by Caddick Group. Construction of the main works is expected to commence in September 2015 with practical completion of the construction targeted for January 2017. The land purchase is expected to be funded by the Company from equity proceeds, with senior debt finance to be introduced in the near term.
BBOX : Tritax investing in TK Maxx warehouse