LondonMetric Property has sold four distribution warehouse assets for a combined £145.3m.
Across three deals, the company has disposed two mega box warehouses and two regional distribution warehouses as it continues to reduce it ‘big box’ exposure.
In Newark, it has sold a 726,000 sq ft warehouse to an international investor for £80.8m, reflecting a net initial yield of 5.1%. The asset, which was acquired in 2014 for £68.5m, is let to Dixons Carphone for a further 14 years at a rent of £6.00/sq ft.
In Doncaster, two distribution assets have been sold to an overseas buyer for £51.2m, reflecting a net initial yield of 6.2%. They comprise a 330,000 sq ft mega warehouse which was acquired in 2015 for £29m and is let to Next for a further four years at a rent of £6.60/sq ft; and a 176,000 sq ft regional warehouse which LondonMetric’s DFS joint venture acquired in 2013 for £16.6m and is let to DFS for a further 10 years at a rent of £7/sq ft.
In Rotherham, a 152,000 sq ft regional distribution warehouse has been sold to a global investor for £13.3m at a net initial yield of 5.0%. The warehouse was acquired in 2014 for £10.3m and is let to the Royal Mail for a further eight years at a rent of £4.70/sq ft.
The four properties have a WAULT of 10 years and generate a rent of £8.3m a year, of which £3.9m is subject to delayed completion until June 2020. The assets have delivered ungeared IRRs of between 8% to 10% since purchase.
The total consideration reflects a 2.6% discount to 30 September book value.
Following the sales, LondonMetric’s big box warehousing will represent 14% of its portfolio, across three assets. Income exposure from Dixons Carphone will fall significantly from 6.3% to 3.0% and DFS exposure reduces from 5.4% to 4.3%.
On a pro forma basis, these sales reduce LTV to 35% compared to 38% at 30 September 2019.
Andrew Jones, chief executive of LondonMetric, said: “We have taken the opportunity to respond to global investor demand for distribution warehousing to monetise some of our larger assets in geographies where we expect income growth to be more muted. The sales further improve the income diversification of our largest occupiers and provides headroom to invest further into urban logistics, which continues to offer superior income growth prospects.”
LMP : LondonMetric sells £145.3m of big box warehouses