LondonMetric Property has sold a portfolio of four multi-let industrial estates to Hines for £40.5m, reflecting a net initial yield of 6.2% and in line with March 2023 valuations.
The estates total 435,000 sq ft across 47 units and generate £2.7m of annual rental income, with a WAULT to first break of 2.9 years. Three of the estates are located in Birmingham (Kingshill, Redwood Park and Shenstone) and the fourth in Rugby (Triton Park).
The group said it will look to focus the portfolio on assets with triple net leases (or NNN) – whereby the tenant pays all the expenses of the property, including taxes, insurance and maintenance.
Chief executive Andrew Jones said: “These assets have delivered returns materially above our initial expectations from a combination of rental growth and yield compression. The sale is expected to be earnings accretive and represents our exit from highly operational multi-let industrial estates.
“Looking forward, we will continue to focus on aligning the portfolio to NNN lease assets that can deliver secure income and growth without incurring dilutive operational costs.”
The properties were previously acquired as part of the Mucklow acquisition in June 2019 for an allocated price of £30.9m. The sales crystallise an ungeared IRR of 13%. LondonMetric has now disposed of £194m of former Mucklow assets, equating to 35% of the original portfolio and generating a 26% uplift against allocated cost.
LMP : LondonMetric sells £40.5m industrial portfolio