LondonMetric acquires UK distribution centre for €60m

LondonMetric is acquiring a new 64,000 m2 distribution centre in a £47 mln (€60 mln) forward-funding transaction.

The investment volume reflects a net initial yield of 7.5%.

LondonMetric, a UK REIT, financed the acquisition of the assets from Omega Warrington, a Miller Development joint venture, from its existing resources.

The warehouse has been pre-let to The Hut, a specialist Health and Beauty on-line retailer on a 15-year lease at a rent of £3.8 million per annum. Construction is due to commence in January 2015 with practical completion targeted for the autumn.

As part of the transaction LondonMetric has agreed that The Hut has the option to acquire the freehold investment 12 months from practical completion, at a price that guarantees LondonMetric a minimum ungeared return on equity of 13.5% per annum.

Following this acquisition, LondonMetric's distribution portfolio totals £534 mln, comprising 20 distribution centres with a WAULT of 15.1 years, 100% occupancy and with 53% of the portfolio subject to fixed uplift or RPI income. The distribution portfolio now represents 43% of the group's portfolio.

LondonMetric was advised by Jones Lang LaSalle.