British Land has exchanged contracts to acquire three warehouses in Wembley for £157m, as it continues to build its urban logistics exposure.
The three warehouses comprise over 245,000 sq ft on a 12.5 acre site and are fully let to Amazon, Euro Car Parts and the North London Waste Authority generating an annual income of £3.6m, equating to a net initial yield of around 2.3%.
The group said the assets come with significant reversionary potential, with plans to develop a “multi-storey, urban logistics hub”. The site is located within the M25, just outside the North Circular, making it ideal for access to central and west London. The group said that supply is highly constrained in this area of London.
The area around the site is designated a Strategic Industrial Land location, promoting industrial employment and development and offers excellent road and rail connectivity, the group said, essential for last mile urban logistics operators. Completion of the acquisition is expected by mid-February.
The acquisition brings British Land’s urban logistics development pipeline to over £1bn of gross development value. The development portfolio consists of recent site acquisitions in Enfield to the north of London, Thurrock to the east and Finsbury Square in the city, and opportunities it has identified within its standing portfolio.
Simon Carter, chief executive of British Land, said: “This acquisition is another example of the strong progress we are making against our strategy to address the chronic shortage of urban logistics space in central London via intensification and repurposing. Wembley is ideally located for vehicles coming into London and subsequently out for delivery with excellent access to affluent parts of the capital.
“This latest acquisition follows acquisitions in Enfield to the north of London, Thurrock to the east and Finsbury Square in the city, and along with opportunities we have identified on our standing portfolio, brings the total gross development value of our urban logistics pipeline to over £1bn, with a blended forecast IRR from acquisition of c.15% across the pipeline.”
[QD comment: Urban logistics is certainly the place to be for property developers, and there is nowhere as prominent as London with soaring demand for space from online retail companies and a severe lack of supply and land. These characteristics have given British Land the confidence to underwrite the deal at an astonishingly low net initial yield of around 2.3% and a price per acre of £12.5m. Given this, multi-storey development seems the only answer to deliver the returns chief executive Simon Carter mentions. There are precious few examples of multi-storey logistics schemes in the UK (plenty overseas) but much talk of them coming. I have no doubt that rents will continue to grow at pace in the London urban logistics market and British Land should be commended for their switch of focus to the urban logistics sector, however it does seem years too late. Land prices were at far more reasonable levels than now and therefore the returns on offer far greater.]
BLND : British Land continues urban logistics growth with £157m purchase