Legal & General Property (LGP) has bought Barking Rail Freight Terminal in London for £53.7m (€75.2m) from AXA Real Estate and dmi Properties in its fourth UK rail terminal acquisition.
Adam Kerr, LGP’s head of long income transactions, said: “The acquisition offers the opportunity to acquire the freehold of a major strategic rail head in east London, giving direct access to the European rail network.”
Rail freight was set to expand substantially over the next decade, he said, because of increasing demand for consumer goods and the need to find more sustainable kinds of transport.
LGP said it made the investment on behalf of its annuity fund and that, as seller, AXA Real Estate was acting on behalf of clients.
Dmi Properties is AXA Real Estate’s joint venture partner.
Bill Hughes, head of real assets at Legal & General Investment Management, said the deal was another example of “the growing synergies between the real estate and infrastructure sectors”.
Not only did the purchase fit with the asset manager’s desire to invest long-term pension money into the UK’s physical framework, but it also promoted “more sustainable investment choices”, Hughes said.
The Barking terminal was a strategic London infrastructure investment, L&G said, that was fully operational and connected directly to High Speed 1 – the rail link from London to the channel tunnel.
The site covers 32.67 acres and is fully let to Deutsche Bahn logistics subsidiary DB Schenker for 20 years from July 2014.
Under the terms of the lease, rent is subject to fixed increases over the first five years, with upward-only five-yearly rent reviews kicking in after that linked to uncapped RPI, L&G said.
It said Barking was a key industrial and commercial location, being 12 miles east of central London and within the M25 motorway that circles the capital city.
The terminal was strategically important in the national rail network, it said, being one of the only two competent container freight terminals serving London.
It was also the most northerly point on the network capable of accommodating European gauge wagons.
Legal & General Property has already bought three other rail terminals in the UK, located in Widnes, Castle Bromwich and Corby.
Advisers in the deal were JLL for AXA Real Estate, and WHY and Rubicon Securities for L&G.