Urban Logistics REIT has acquired five new assets for a total of £48m at a net initial yield of 6.0%.
It has bought a portfolio of four assets for £39.5m at blended 6.1% net initial yield. All of the assets in the portfolio are immediately income producing but with short or medium term asset management opportunities. The portfolio comprises:
- a 95,352 sq ft unit in Redditch, Worcestershire, let to Carpet and Flooring (Trading) Limited, on a lease expiring in 2027;
- a 112,586 sq ft unit in Droitwich, let to Amazon UK Services on a lease expiring in 2026;
- a 113,071 sq ft unit in Southampton, let to Delamode Logistics Limited, on a lease expiring in 2024; and
- a 81,699 sq ft unit in Rugby, let to the Volvo Group UK Ltd, on a lease expiring in 2026.
Separartely, the group has bought a 63,488 sq ft warehouse in Aylesford Way, Thatcham for £8.7m at a net initial yield of 5.8%. It is located near junction 12 of the M4 motorway and is let to Offsite Storage and Integrated Services Ltd on a lease expiring in 2029.
Asset management update
Since 30 September 2022, the company has signed two new leases, two lease restructures, while one pre-let lease commenced in the period.
The two new lettings represented a 9% increase on the previous passing rent, and generates a total of £562,874 in annual rental income. The first was a new lease on a 21,875 sq ft unit in Sittingbourne, Kent, with Sign Trade Supplies Limited, for a term of 10 years at a rent of £207,874 per annum. The second was for a 56,385 sq ft unit in Peterborough with 2Excel Limited, for a 15 year term at a rent of £355,000 per annum.
In addition, two leases were restructured to remove breaks, moving WAULT to first break for these assets from 4.2 years to 9.2 years, while the rent levels remained unchanged. These were both on assets let to Tuffnells Parcels Express – one in Northampton where a lease break in April 2027 was removed, leaving the lease running until April 2032, with a rent review in 2027 and the other in Sheffield where a lease break in December 2026 was removed, leaving the lease running until December 2031, with a rent review in 2026.
A pre-let lease on one of the company’s newly completed forward funded development assets commenced on a 120,815 sq ft unit in Golborne, Warrington, to Master Removers Ltd for a term of 15 years at a rent of £964,406 per annum.
Newly completed forward funded developments
In the period a further 239,355 sq ft of development assets reached practical completion, comprising five logistics units, the construction of which was forward funded by the company. Three of the five units are under offer, one was pre-let and marketing is ongoing for the final unit.
ESG rating
The company was recently reviewed by MSCI’s ESG team and received a rating of ‘A’ (up from ‘CCC’). Chief executive Richard Moffitt said: “We are pleased to see MSCI recognise our commitment to ESG with a significant upgrade to our rating from CCC to A, which follows our recent upgrades from GRESB and EPRA’s sBPR awards, and we look forward to building on this success.”
He added: “In the period since 30 September 2022, we have selectively deployed capital into assets which provide immediate income at a very attractive yield and provide the potential for value enhancing mid-term asset management opportunities. We have also been able to achieve significant rental uplifts on new lettings, demonstrating the quality of our existing portfolio and proving our asset management strategy. In addition, we have completed five developments in this period on time and on budget providing a very attractive yield on cost and demonstrating an additional route through which we can deliver returns for shareholders.”
SHED : Urban Logistics acquires five assets for £48m