Schroder REIT buys multi-let industrial estate in Chippenham for £19.25m, reflecting a net initial yield of 8.2%.
Langley Park is located in Chippenham town centre close to the railway station and four miles south of junction 17 of the M4 motorway. It is in close proximity to the cities of Bristol and Bath and serves both metropolitan areas. The estate comprises approximately 400,000 sq ft of warehouse and ancillary office accommodation on a 28 acre site, equating to a low site cover of approximately 30%. Langley Park is let to five tenants producing a total net rent of £1.68 million per annum or an average rent of £4.21 per sq ft. 100% of the rent due during the Covid-19 pandemic has been collected. The estimated market rental value is approximately £1.8 million per annum. The average unexpired lease term, assuming all tenant breaks are exercised, is four years.
The largest tenant is Siemens Mobility Limited, representing 53% of the rental income, who employ approximately 800 people at the site. Langley Park is the global headquarters for Siemens Mobility who, through corporate acquisitions, have occupied the site for over 85 years as a facility for manufacturing and servicing rail technology and traffic systems. Siemens pay a net rent of £965,000 per annum with a lease expiry in June 2026. Other tenants include a UK subsidiary of Littlefuse Inc., a global manufacturer of power systems for the transport industry (20% of rental income), Schneider Electric Limited (11% of rental income) and NHS Property Services Limited (8% of rental income).
The strategy is to work closely with the occupiers to align their occupation with various estate management improvements. The current low site density could enable the creation of new accommodation. Longer term, several large-scale infrastructure and related investments in Chippenham, including rail improvements and additional housing allocations should support alternative use values and the surrounding area.
This takes the trust’s industrial weighting to 33% of the portfolio. This still leaves £60m of cash and undrawn debt facilities available for further investment.
SREI : Schroder REIT buys multi-let industrial estate