Brixton spends EUR 96m at Heathrow

Brixton plc, the UK-listed warehouse and industrial property investor, has made two investments in its core Heathrow market for a total of £71 mln (EUR 96 mln). In the largest of the two deals, Brixton acquired Heathrow Gateway, Feltham, from an unnamed vendor for EUR 86.5 mln.

The two-unit Heathrow Gateway scheme totals approximately 354,000 square feet (33,000 m2) and was completed in 2001/2002. The Royal Mail occupies a 224,000 sq ft unit let until 2025 at a current rent of £10.23 per sq ft and EGL Eagle Global Logistics occupies 130,000 sq ft on a lease to 2022 at a rental of £10.96 per sq ft. The overall current rent is £3.72 mln per annum and the price equates to a net initial yield of over 5.5%. Brixton said the vendor had only recently brought this property to the market and was originally seeking the equivalent of EUR 90 mln, a 5.25% net initial yield. King Sturge acted for Brixton, while Knight Frank represented the vendor.

The second acquisition was the Riverside Cargo Centre, Poyle from Clerical Medical Managed Funds for £7.85m. The property comprises three warehouse buildings constructed in 1998 totalling just over 43,000 sq ft and let to Swiss Post, City Air Express and World Courier (UK) on terms running until at least 2013/2014. The total rental is approximately £415,000 per annum which equates to an overall figure of just over £9.60 per sq ft. The price paid represents a 5% net initial yield and a reversionary yield of over 5.5%. CBRE acted for Brixton with Lewis Ellis representing the vendors.

Heathrow Gateway is the largest investment transaction to take place at Heathrow in 2007 and both acquisitions follow on from two institutional purchases in August and September at sub 4% initial yields and Brixton' s own purchase of the Mercury Centre in December at 4.3% net initial and 5.2% net equivalent yields.