Warehouse REIT has exchanged contracts to acquire an industrial estate in Milton Keynes for £62m, reflecting a net initial yield of 4%.
The multi-let Bradwell Abbey Industrial Estate totals 335,000 sq ft across 69 units and is located just off the A5, and close to the M1 motorway. The estate is currently 96% let to a range of occupiers including Argos, F&F Stores and Taylor Kerr Engineering Ltd and produces a total annual income (including some rental guarantees) of over £2.6m, equating to an average rent of £7.80 per sq ft. Prime rents in the area range from £10 to £14 per sq ft, offering the company reversionary potential.
Andrew Bird, managing director of the investment advisor, Tilstone Partners, said: “This acquisition provides Warehouse REIT with clear opportunities to generate upside through strategic capital expenditure and working with the existing occupiers. We intend to refurbish units as they become available, improving the estate’s sustainability credentials, enabling us to capture new rental levels which will help drive future rents across the estate and strengthen the covenant profile.
“Located in one of Warehouse REIT’s favoured locations, the Oxford-Cambridge Arc’s industrial markets are characterised by an acute supply demand imbalance, driven by the growing dual demand from both industrial and science and technology occupiers. With supply failing to keep up with record levels of take up, land values have increased rapidly and strong rental growth is forecast.”
Milton Keynes has vacancy rate of around 4% and is considered to be one of the premier distribution and industrial locations in the UK. Following this acquisition, over 20% of Warehouse REIT’s portfolio is in the Cambridge-Oxford Arc, which will increase further on completion of two ongoing development projects in the Oxford and Cambridge areas.
WHR : Warehouse REIT buys £62m estate in Milton Keynes