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BMO Commercial Property Trust increases logistics exposure with £66m double buy

BMO Commercial Property Trust has bought two logistics assets for £66m and committed to two developments within its existing portfolio at a cost of £10.5m.

These initiatives are in line with the group’s strategy of recycling capital into the industrial and logistics sector and follows the sale of its second largest asset – Cassini House, London – in XXX. The group’s portfolio weighting to the industrial and logistics sector has increased to 30.6% (from 19.1% at December 2020).

New acquisitions

The company has acquired Orion One and Two, Markham Vale, Derbyshire for a price of £44.5m, reflecting an initial yield of 3.7%. The two newly built units were completed in April 2021, with the 224,424 sq ft Orion One let to The National Lighting Company Limited on a lease term expiring in August 2031 at a rent of £1,289,000 per annum with a rent review at year five, linked to RPI and collared and capped at 1.5% – 3.5% per annum. Orion Two comprises a smaller unit of 75,958 sq ft and is let to Smurfit Kappa UK Ltd on a lease expiring October 2031 (tenant break October 2026) at a rent of £475,000 per annum, subject to a rent review in the fifth year.

The second acquisition is Unit 4, Quintus Business Park, Burton-Upon-Trent, which is structured as a forward funding to develop a new logistics warehouse of 171,550 sq ft. The property has been pre-let to Werner UK Sales & Distribution Limited on a lease term upon completion of 15 years (tenant break after 10 years) at a rent of £1,072,000 per annum, with five yearly rent reviews linked to RPI and collared and capped at 2% – 4% per cent per annum. The purchase price is £21.5m, which equates to an initial yield of 4.84%. The development has achieved planning consent and is expected to complete in July 2022.

Developments within portfolio

At Estuary Business Park, Speke, Liverpool the company has committed to the speculative development of a 52,000 sq ft mid-box logistics unit on land already owned and adjoining an existing ownership. The total construction cost is expected to be in the region of £4.8m with an income return on cost forecast to be around 6.5% when let.

In Colchester the company has secured planning consent to demolish an obsolete warehouse unit at the Cowdray Centre and the re-development of 35,000 sq ft to form a new multi-unit trade counter park. This development will also be undertaken speculatively and will incur expenditure of £5.7m. It is expected a start on site will commence this quarter and early marketing has identified encouraging tenant demand.

BCPT : BMO Commercial Property Trust increases logistics exposure with £66m double buy

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