AEW UK REIT has acquired a multi-let industrial estate, which increases its exposure to the sector to 54.3%.
The company has bought Westlands Distribution Park in Weston Super Mare for £5.4m, using the proceeds from the sale of its largest asset earlier this year.
The purchase price reflects a net initial yield of 6.4%, which is expected to rise to at least 7.4% in the medium term when asset management initiatives are implemented.
The average passing rent at the scheme is £1.50 per square foot, providing strong potential for rental growth.
The 323,437 sq ft estate is let to 15 tenants including North Somerset District Council, which make up 30% of the income stream. It is located three miles from the M5 Motorway and 20 miles south of Bristol city centre.
Following completion of the purchase, the company holds cash of £9.24m.
Portfolio managers Alex Short and Laura Elkin said: “Following the very profitable sale of our largest asset in Corby during May, we have undertaken cautious analysis of the investment market and our pipeline in the intervening months when looking to replace Corby and its income stream within the portfolio.
“This latest acquisition is an excellent fit for the portfolio as it offers significant potential for future value accretion in addition to its very low level of passing rent which provides strong prospects for future rental growth.”
AEWU : AEW UK REIT acquire industrial estate