Warehouse REIT has announced that it has exchanged contracts to acquire a portfolio of seven industrial assets, in the North West of England, for £18.25m. The transaction is expected to complete today (21 December 2017) and the purchase price reflects a net initial yield of 7%.
The acquired portfolio
The acquisition brings the Company’s assets under management to £167 million and the acquired portfolio comprises 326,254 square foot, with “a diverse mix of asset types” and an average unit size of 15,000 square foot. The assets are as follows:
- Road One, Winsford is a 78,178 square foot warehouse
- Parkway Zone 2, Deeside Industrial Estate, Chester is a 60,081 square foot production facility
- Quantum Park, Manchester is a 46,507 square foot trade counter
- Europa Trading Estate, Kearsley, Manchester is a 40,000 square foot warehouse
- Wardley Industrial Estate, Manchester is a 38,901 square foot warehouse
- Linkway Industrial Estate, Middleton is a 48,074 square foot warehouse
- The Oakfield Centre, Sharston, Manchester is a 14,513 square foot warehouse.
Well located ‘last mile’ assets
Warehouse REIT says that all of these assets are situated in established industrial locations within the ‘Northern Powerhouse’ region; each asset benefits from excellent motorway connections; the assets are all in urban areas or on strategic infrastructure links; and that 5 of the assets are within only 6 miles of Manchester City Centre (Warehouse REIT says that reflects its ‘last mile’ investment strategy).
Less than 4% void rate
Warehouse REIT says that, “Demonstrating the strength of tenant demand for the portfolio, it has been acquired with less than 4% voids”, while “A low average industrial passing rent of £3.49 per square foot presents significant reversionary potential”. In addition, approximately 72,000 square foot of space is subject to lease expiries within the next year, which it says provides management with a near-term opportunity to grow rents 12% to ERVs. There is potential planning for 24,000 square foot of additional space, which it says creates the opportunity to increase rents over the long term.
About Warehouse REIT
Warehouse REIT aims to provide its shareholders with an attractive level of income together with the potential for income and capital growth by investing in a diversified portfolio of UK commercial property warehouse assets. The company will hold a diversified portfolio of well-located freehold and long leasehold warehouse assets including warehouses in the Industrial/Manufacturing, Storage and Distribution, Trade-counter and Retail Warehouse sub-sectors.
There will be a preference for multi-let estates and a strong focus on income-producing investments. The company may acquire property interests either directly or through corporate structures (whether onshore UK or offshore) and also through joint venture or other shared ownership or coinvestment arrangements.