LondonMetric Property has acquired a Next Distribution warehouse for £29 mln (€41 mln), reflecting a net initial yield of 6.3%.

LondonMetric Property has acquired a Next Distribution warehouse for £29 mln (€41 mln), reflecting a net initial yield of 6.3%.

The off-market acquisition is from a private property company and will be funded from LondonMetric's existing resources.

The warehouse is located two miles northwest of Junction 38 of the A1(M) in South Elmsall, Doncaster near to LondonMetric’s Superdrug Distribution Centre. It forms part of Next’s logistics hub in the area, with three further Next owner-occupied units on adjacent sites.

The 330,300 sq ft (30,700 m2) asset was purpose-built for Next in 2005 and incorporates 22,000 sq ft of office space. With additional mezzanine floors, this increases the internal area to 725,000 sq ft. The unit is let at a rent of £1.9 mln per annum with a further 2.5% per annum compounded fixed uplift in April 2019, and has an unexpired lease term of nine years.

Following this acquisition, LondonMetric’s distribution portfolio comprises 22 distribution centres and totals £656.6 mln. The portfolio has 100% occupancy, and a weighted average unexpired lease term of 13.7 years.

Andrew Jones, chief executive of LondonMetric, commented: 'This is a highly automated warehouse which is let to a great tenant and is a strong addition to our distribution portfolio. It complements our ownership of the nearby Superdrug Distribution Centre and also increases our exposure to one of the UK's top retailers with whom we already have an excellent relationship.'

LondonMetric was advised by Savills and JLL acted for the vendor.