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- BMO Commercial Property Trust increases logistics exposure with £66m double buy
BMO Commercial Property Trust has bought two logistics assets for £66m and committed to two developments within its existing portfolio at a cost of £10.5m.
These initiatives are in line with the group’s strategy of recycling capital into the industrial and logistics sector and follows the sale of its second largest asset – Cassini House, London – in XXX. The group’s portfolio weighting to the industrial and logistics sector has increased to 30.6% (from 19.1% at December 2020).
The company has acquired Orion One and Two, Markham Vale, Derbyshire for a price of £44.5m, reflecting an initial yield of 3.7%. The two newly built units were completed in April 2021, with the 224,424 sq ft Orion One let to The National Lighting Company Limited on a lease term expiring in August 2031 at a rent of £1,289,000 per annum with a rent review at year five, linked to RPI and collared and capped at 1.5% – 3.5% per annum. Orion Two comprises a smaller unit of 75,958 sq ft and is let to Smurfit Kappa UK Ltd on a lease expiring October 2031 (tenant break October 2026) at a rent of £475,000 per annum, subject to a rent review in the fifth year.
The second acquisition is Unit 4, Quintus Business Park, Burton-Upon-Trent, which is structured as a forward funding to develop a new logistics warehouse of 171,550 sq ft. The property has been pre-let to Werner UK Sales & Distribution Limited on a lease term upon completion of 15 years (tenant break after 10 years) at a rent of £1,072,000 per annum, with five yearly rent reviews linked to RPI and collared and capped at 2% – 4% per cent per annum. The purchase price is £21.5m, which equates to an initial yield of 4.84%. The development has achieved planning consent and is expected to complete in July 2022.
At Estuary Business Park, Speke, Liverpool the company has committed to the speculative development of a 52,000 sq ft mid-box logistics unit on land already owned and adjoining an existing ownership. The total construction cost is expected to be in the region of £4.8m with an income return on cost forecast to be around 6.5% when let.
In Colchester the company has secured planning consent to demolish an obsolete warehouse unit at the Cowdray Centre and the re-development of 35,000 sq ft to form a new multi-unit trade counter park. This development will also be undertaken speculatively and will incur expenditure of £5.7m. It is expected a start on site will commence this quarter and early marketing has identified encouraging tenant demand.
BCPT : BMO Commercial Property Trust increases logistics exposure with £66m double buy
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