British Land has acquired a warehouse in Enfield for £87m and has announced plans for 1m sq ft of urban logistics development at two of its shopping centre sites.
It is the first foray into the burgeoning logistics sector for the REIT, which has traditionally had a portfolio focused on offices and retail.
It has exchanged contracts on the acquisition of Heritage House, a 200,000 sq ft warehouse in Enfield, for £87m. The asset is currently fully let to Waitrose (for their North London customer fulfilment centre) and Crown Records Management and offers significant redevelopment potential given the opportunity to increase density, the company said.
The group said it expects to submit planning applications on the shopping centre sites, at Meadowhall in Sheffield and Teesside, in the coming months.
It is also evaluating further urban logistics development opportunities inside the M25, where it said rental growth prospects are most compelling.
Retail portfolio
British Land said leasing volumes in its retail portfolio were ahead of last year although pricing was lower. For the 11 months from 1 April 2020 to 28 February 2021 total lettings and renewals covered 1.4m sq ft (FY20: 1.36m sq ft). On average, deals over one year were 20% below previous passing rent.
The group said it believes there is value opportunity in out of town retail parks, where yields are higher and there is a more stable occupational market.
It has recently completed the acquisition of The A1 Retail Park in Biggleswade, Bedfordshire for £49m on a net initial yield of 8.5%. The park is let to a range of occupiers including M&S, Next and Boots.
The group has also acquired the 22% stake that it doesn’t already own in HUT (Hercules Unit Trust), which comprises 10 prime retail parks, for £150m.
It is exploring further acquisition in the retail park sector, it added.
Rent collection
The announcement came as part of an operational update, in which it said it had collected 82% of rent for full year 2021 – this is broken down into 99% offices and 70% retail.
For the current quarter (to the end of June 2021), it has so far received 76% of rent due, broken down into 96% office and 54% retail.
BLND : British Land moves into logistics development