Fidelity Worldwide's UK Real Estate Fund has completed the purchase of a distribution centre in the UK. The investment volume of £16 mln (€20 mln) reflects a net initial yield of 6.6%.

Fidelity Worldwide's UK Real Estate Fund has completed the purchase of a distribution centre in the UK. The investment volume of £16 mln (€20 mln) reflects a net initial yield of 6.6%.

The 20,625 m2 property is located in the town of Coalville, Leicester.

Frank Steier Price represented Fidelity and CBRE was the vendor during the acquisition.

The property is let to Pall-Ex Holdings, a provider of palletised freight distribution services in the UK and Europe, on a 20-year, fully repairing and insuring lease with five-year fixed rental uplifts. The annual passing rent is low and offers good growth potential, with the East Midlands region being one of the most constrained in the UK for logistics supply, Fidelity said.

This marks the ninth acquisition for the Fidelity UK Real Estate fund in 2014.

Steve Howling, UK portfolio manager at Fidelity Worldwide Investment, said: 'This acquisition demonstrates our commitment to purchasing high quality secondary real estate under the pressure of an increasingly competitive market, while not compromising on yield.

'The fund has performed well over the last year due to a combination of valuation uplifts led by strong market pricing and active asset management. During this period we have managed to deliver an above average distribution yield of 5.8%.'

Fidelity’s UK Real Estate Fund is a UK Balanced Real Estate Fund aimed exclusively at institutional investors. The fund invests across the UK, particularly in regional markets.