Warehouse REIT has acquired a portfolio of five warehouses for £43.6m, reflecting a blended net initial yield of 6.7%.
It has bought the properties from Greenstone Property Holdings, a company owned by Warehouse REIT directors Simon Hope and Stephen Barrow.
The assets total 570,000 sq ft and provide an annual rent of £2.95m as well as a combined WAULT of 5.5 years.
The individual assets are:
- Gateway Park, a 28-unit industrial estate totalling 220,000 sq ft adjacent to Birmingham Airport. The park generates £1.3m per annum of contracted rent and is let to a mix of tenants including FedEx, pan-European freight distributor Circle Express and Swissport cargo services.
- A 50,000 sq ft unit on Viables Business Park in Basingstoke, occupied on a lease expiring in 2026 by global golf manufacturer TaylorMade and serving as its European headquarters, guaranteed by Adidas. The annual rental income is £422,000.
- Chittening Industrial Estate in Avonmouth is a 200,000 sq ft, 10-unit scheme generating £545,000 per annum of contracted rent. It is 88% let to a diverse range of tenants including Palletways UK, Encon Insulation and DS Smith.
- A three-unit warehouse property on Newport Road, Cardiff, totalling 50,000 sq ft and generating £519,000 per annum of rent.
- A 54,000 sq ft warehouse in Ebbw Vale, South Wales, leased to global DHL, on an eight-year term.
The acquisition will be funded through the deployment of Warehouse REIT’s £153m equity raise in July.
Background to and details of the transaction
The transaction involves the subscription by Warehouse REIT of approximately £32m in cash for shares in Greenstone followed by the acquisition of the shares in Greenstone not already owned by the company. The subscription results in the company owning just under 80% of the issued share capital of Greenstone.
Warehouse REIT has also entered into a conditional share sale and purchase agreement for the acquisition, subject to shareholders’ approval, of the shares in Greenstone not already owned by the company following the subscription, representing just over 20% of the issued share capital of Greenstone. The consideration of approximately £9.0m is based on the same pro rata value as the subscription and will be satisfied by the allotment and issue of 7.6 million ordinary shares at 118.4 pence per share, being the EPRA Net Tangible Assets per share as at 30 September 2020, which represents a premium of 3.9% to the closing price of 114.0 pence per share on 13 November 2020. The transaction involves the repayment of £2.7m of shareholder loans to the sellers.
Prior to the subscription, Greenstone was owned by Simon Hope and Stephen Barrow, both directors of Warehouse REIT, and Jenny Barrow, Stephen’s wife. As a result, the subscription and acquisition constitute related party transactions for the purposes of the AIM Rules.
The proposed acquisition, which is also a “substantial property transaction” under Section 190 of the Companies Act, is subject to shareholder approval. The resolution to approve the acquisition requires a simple majority of votes in favour. The sellers will not to vote on the resolution, and have undertaken to take all reasonable steps to ensure that their respective associates do not vote on the resolution. If the resolution is not passed by shareholders at the general meeting, the acquisition will not complete.
WHR : Warehouse REIT acquires £43.6m portfolio