Urban Logistics (SHED) has announced that it has acquired five assets, worth £90m with significant potential for further value creation through active asset management. The five properties have net initial yields (NIY) ranging from 4.2% to 6.5%, or 4.5% on a blended basis. Four of the properties are income-producing and one property is vacant.
Brent Road, Southall
Brent Road, Southall (pictured) is a 97,362 sq. ft. warehouse in West London, fitted out for frozen food storage. The purchase price paid was £46,000,000 at a NIY of 1.9% with two months remaining on the lease. SHED says that the property is highly reversionary, with the current tenant paying £10 psf and rents in the area being in excess of £25 psf. SHED says that it anticipates quickly letting the property to capture this reversionary yield, and anticipates signing a new long term lease providing a yield of 4.2%, which should create a significant valuation increase.
The warehouse has an eaves height of circa 9.8m and benefits from good internal access via 4 level and 13 dock level loading doors. There are large service yards with ancillary parking area to the south and west of the warehouse, with a maximum yard depth of approximately 60m to the west, and 48m to the south. The main offices are arranged over ground, first and second floors, with additional offices at first floor level fronting the yard above the loading doors. Click here to see the brochure for the property.
Beveridge Lane, Bardon
Beveridge Lane, Bardon is a 249,211 sq. ft. logistics warehouse two miles from the M1. The purchase price paid was £35,385,000 at a NIY of 4.7%. The unit is let to DHL Supply Chain Ltd on a lease expiring in 2027. SHED says that the asset has near term asset management potential.
Downgate Drive, Sheffield
Downgate Drive, Sheffield is a 31,105 sq. ft. newly refurbished industrial warehouse close to the M1. The purchase price paid was £3,120,000 at a target NIY of 6.1%. The unit is currently vacant and is being marketed.
Fowler Road, Dundee
Fowler Road, Dundee is a 29,834 sq. ft. logistics warehouse on the West Pitkerro Industrial Estate. The purchase price paid was £2,800,000 at a NIY of 6.5%. The unit is let to the DPD Group on a lease expiring in 2027.
Silkstone Road, Barnsley
Silkstone Road, Barnsley is a 24,230 sq. ft. industrial warehouse located in the Dodworth Business Park. The purchase price paid was £2,600,000 at a NIY of 5.2%. The unit is let to a vintage clothing operator, which processes and sorts textile recycling on site, with the lease expiring in 2029. The low rent of £6.00 psf is subject to an open market review in 2024 offering good reversionary potential, with rents in this area being in excess of £7.50 psf.
Comments from Richard Moffitt, SHED’s CEO
“During recent market volatility we have been deliberately patient in our deployment, and that patience has been rewarded by our ability to acquire these properties in prime locations on advantageous terms.
“Our occupational market, with its focus on supply chains for essential goods, remains strong with continued upward pressure on rents. We firmly believe that, at any stage in the property cycle, if we improve lease lengths we will see yield compression.
“We therefore see substantial potential valuation increases in these acquisitions, driven by our asset management plans.”