LondonMetric Property has exchanged to sell its Primark-let distribution warehouse in Thrapston, Northamptonshire, to EQT Exeter for £102.0m, reflecting a net initial yield of 4.1%.
The group acquired the property in 2013 for £60.5m, at a net initial yield of 6.4%, and since acquisition, the property has delivered a total return of 123% and an ungeared internal rate of return (IRR) of 12%. The sale price is 8% above the 31 March 2021 book value.
The 785,000 sq ft warehouse is let to Primark for another 11 years at a rent of £4.4m per annum. Completion of the sale will take place in February 2022, with LondonMetric benefitting from an additional £2.2m of income during that time.
The sale is another step in LondonMetric’s strategy to reduce its exposure to ‘mega distribution’ or ‘big box’ logistics assets in favour of smaller urban logistics properties, which have a more favourable supply-demand dynamic. On completion of the sale, LondonMetric’s portfolio weighting towards mega distribution will fall from 13% to 10%, while its rental income exposure to Primark will fall from 8% to under 5%. The group retains its other Primark logistics warehouse which totals 1.1 million sq ft and is let for a further 19 years.
Andrew Jones, chief executive, said: “This is a very good asset that has performed strongly, delivering a total return of £76m since acquisition. The sale price achieved reflects a very competitive bidding process and highlights the depth of demand for well let logistics assets delivering reliable, repetitive and growing income.”
LMP : LondonMetric makes big profit on sale of £102m big box