BMO Commercial Property Trust (BCPT) announced on Monday that it has increased the portfolio’s industrial weighting to 29.3% following the acquisition of two high-quality logistics assets in the UK midlands.
The fund, which is managed by BMO Real Estate Partners (BMO REP), the pan-European property investment and asset management specialist arm of BMO Global Asset Management (EMEA), has strengthened its exposure to the sector with the commitment to two logistics developments, originating from its existing portfolio, with this combined investment activity totaling £76.5 mln (€92 mln).
The first acquisition comprises Orion One and Two of Derbyshire’s 200-acre flagship redevelopment scheme, Markham Vale, which was purchased for £44.5 mln, reflecting a net initial yield of 3.7%.
The asset, which was completed to the highest standards in April 2021, benefits from a strategic logistics location adjoining junction 29A of the M1 Motorway. The two purpose-built units comprise 224,424 sq ft (20,850 m2) and 75,958 sq ft respectively and are each fully let to strong covenants on newly agreed 10 year leases generating a combined rent of £1.76 mln per annum.
BCPT has also acquired Unit 4 of Quintus Business Park in Burton-Upon-Trent by way of forward funding the development of a new 171,550 sq ft logistics warehouse for a total consideration of £21.5 mln, reflecting a yield of 4.84%. Construction of the property, which is targeting a BREEAM Excellent rating, is underway, with completion expected in July 2022. A pre-let has already been agreed on a 15-year lease term [(tenant break after 10 years)] at a rent of £1 mln per annum.
BCPT has also committed £10.5 mln to the speculative development of two logistics schemes from within its portfolio, comprising a 52,000 sq ft mid-box logistics unit at Estuary Business Park, Liverpool, and a 35,000 sq ft new multi-unit trade counter at the Cowdray Centre in Colchester.
This activity represents the first phase of re-investment of the £199.5 mln gross proceeds generated from the disposal of Cassini House, London and two retail warehouse assets in East Kilbride and Rochdale, during 2021. It is in line with the company’s goal to increase the portfolio weighting towards the strongly performing industrial and logistics sectors.
‘This activity simultaneously has the added benefit of increasing the Fund’s tenant roster with leases linked to RPI and exposure to assets achieving strong underlying ESG performance,’ said Richard Kirby, lead manager of BCPT.
BMO REP was advised on these transactions by Knight Frank and CBRE.
