SEGRO has announced that it has entered into an exclusive partnership with Roxhill to potentially develop more than 10 million square feet of big box logistics warehousing, over 10 years, in the South East and Midlands. This will allow SEGRO to add significant scale to its UK big box logistics portfolio.
SEGRO says that Roxhill is a highly respected logistics developer that it knows well (SEGRO established a successful joint venture with Roxhill in 2013 at the Rugby Gateway site). Roxhill Management Rugby Limited will act as development manager to the new partnership and will work exclusively with SEGRO once Roxhill has completed a number of existing development projects with other partners.
The sites that are subject to the transaction are at various stages of the planning process and the terms of the transaction allow SEGRO to phase its investment (thereby avoiding the initial drag of holding non-income producing land on its balance sheet – according to the company). An initial investment, the majority of which is deferred, will be payable in consideration for a 50% share of Roxhill’s interests in options over the sites. The deferred payment is due on each site as and when planning permission is granted, at which point SEGRO has the right to buy Roxhill’s remaining interests in the sites. Under the terms of the agreement, SEGRO will fund planning fees and development management costs. After a period of 30 months from completion, SEGRO has the right to acquire all of Roxhill’s remaining option interests as well as the management platform (Roxhill Management Rugby Limited).
According to SEGRO, should all of the sites become fully developed, they estimate that the total potential capital expenditure (including land and infrastructure) to be around £800m, over a 10 year period, which would deliver over 10 million square feet of big box logistics warehousing. SEGRO has said that the developments should generate an estimated blended yield on cost of approximately 7 per cent at today’s rental levels. SEGRO say that they are convinced that this market has very favourable long term prospects given what they see as a lack of quality supply and increasing demand from retailers and logistics operators for modern space in the right locations.
SEGRO announces 10 year Big Box partnership with Roxhill : SGRO