Schroder Real Estate Investment Trust has acquired a portfolio of four industrial assets in the north west of England for £19.85m, reflecting a net initial yield of 6.9%.
The portfolio acquisition, to be funded by drawing on the revolving credit facility, generates rental income of £1.45m per annum. The acquisition increases the group’s industrial weighting from 40.2% to 42.7%.
Following completion, net loan to value will be 34.7%, with cash of £11.8m and remaining undrawn loan facilities totalling £6.8m.
Valley Road Industrial Estate, Birkenhead
It has exchanged contracts to acquire Valley Road Industrial Estate in Birkenhead, for £11.4m, reflecting a net initial yield of 6.8% and a reversionary yield of 7.8%. The 10-acre estate comprises 190,000 sq ft of warehouse space and ancillary offices across 15 units, of which 41% by area have been recently refurbished.
The estate is located close to Junction 1 of the M53 and is let to seven tenants generating a combined rent of £830,000 per annum, reflecting a low average rent of £4.36 per sq ft. This compares with an estimated rental value (ERV) of £950,000 per annum, or £4.99 per sq ft, at the site. Tenants include KPFF Limited, a frozen food distribution production company; Balfour Beatty, an international infrastructure company; and Park Retail, a gift and voucher distribution company.
The weighted average unexpired lease term (WAULT) is 4.3 years to earliest termination. Around 10% of the estate is vacant, where the refurbishment has just been completed and where there is a 12 month rental guarantee.
Coral Products, Haydock Industrial Estate, Haydock
It has acquired a 98,551 sq ft manufacturing and recycling facility on Haydock Industrial Estate, which is leased to Coral Product (Mouldings). The purchase price of £4.9m reflects a net initial yield of 6.6%. Coral, which was recently acquired by a subsidiary of the Canada-based IPL Plastics Group, occupy the entire site on a lease expiring in January 2031, with a tenant break in 2026, at a rent of £340,000 per annum or £3.45 per sq ft. This compares with an ERV of £394,000 per annum or £4.00 per sq ft.
Newfield Fabrications, Sandbach, Cheshire
It has also acquired two assets let to Newfield Fabrications, a steel fabricating business established in 1965, for a combined £3.6m, which reflects a net initial yield of 7.4%. Both assets are in an established industrial area in Sandbach, Cheshire, approximately three miles from junction 17 of the M6.
The first asset comprises a 77,880 sq ft manufacturing and distribution facility on a 4.1-acre site, let on a 13.9 year term at a rent of £247,000 per annum, or £3.17 per sq ft. The lease benefits from five yearly rent reviews linked to the retail price index (RPI), subject to a minimum increase of 2% per annum and a cap of 4% per annum.
The second asset comprises an 8,000 sq ft industrial unit, also let for 13.9 years at a rent of £36,000 per annum, or £4.50 per sq ft. The lease also benefits from five yearly rent reviews linked to the RPI, subject to a minimum increase of 2% per annum and a cap of 4% per annum.
SREI : Schroder REIT buys £20m industrial portfolio