Urban Logistics REIT has announced that it has exchanged contracts with Carbide Properties Limited, conditional on receipt of planning permission, for the forward funding of two high-quality urban logistics assets at Staffordshire’s Stone Business Park and Leicestershire’s Lime Kilns Business Park in Hinckley. The gross development value of the total acquisition is £15.4 million and will be financed from the Company’s cash resources including the proceeds from two property sales, one of which is expected to exchange in the near future, together with debt from its existing club facility. The company has made a change to its investment policy, which allows this transaction to proceed (see below)
Stone Business Park acquisition
The site at Stone will comprise four logistics units with a total gross internal floor area of 86,000 square feet. Stone Business Park is an established industrial location and benefits from direct access to junctions 14 and 15 of the M6.
Lime Kilns Business Park acquisition
The site at Hinckley will comprise two units with a total gross internal floor area of 63,500 square feet. Lime Kilns Business Park has direct access to the A5 and is close to junction 1 of the M69, enabling easy onward access to the M1 and M6.
Urban Logistics REIT to benefit from 6% coupon during construction
During the construction of both assets, which is expected to commence in June 2019, Urban Logistics REIT will benefit from a 6.0% interest rate coupon on the forward funding provided. Practical completion for Stone and Hinckley is being targeted for December 2019 and January 2020 respectively.
Strong interest from prospective tenants
Richard Moffitt, CEO of Urban Logistics REIT and chairman of M1 Agency, said “These acquisitions will add high quality new assets to the Company’s portfolio at a time when smaller urban logistics sites are in short supply. We have experienced strong interest from prospective tenants and expect to be fully pre-let by the time both assets reach practical completion”.
M1 Agency Fees – a related party transaction
At the point the Company completes on the Acquisition, it will incur, on an arm’s length basis, a commercial agency fee from M1 Agency LLP which is 1.0% of the purchase price of the land acquired (£22,700). M1 Agency LLP is a partnership in which Richard Moffitt, Urban Logistics REIT CEO, is a designated member.
Changes to investing policy
Urban Logistics REIT also says that is taking the opportunity to make the following change to its investing policy (highlighted below). No other amendments are being made.
“other than any investment properties requiring re-development, the Company will not invest in assets (including development assets) which are unoccupied or not producing income at the time of acquisition unless it is part of or less than 10 per cent. of the Gross Asset Value. The Company may finance development assets using, inter alia, forward funding arrangements;”