UK industrial REIT LondonMetric has agreed to purchase and fund a new 232,000 ft2 (21,500 m2) distribution warehouse in the north of England for £24 mln (€26 mln), reflecting a yield on cost of 5.2%.
Financial details were not disclosed.
Situated by junction 36 of trans-Pennine motorway the M62, the warehouse has been pre-let to Croda, a FTSE 100 speciality chemical company, on a 20 year lease. The annual rent of £1.3 mln is subject to yearly RPI-linked rental uplifts of between 1% and 3%, LondonMetric said.
'In this ongoing low interest rate environment, we continue to be attracted to sustainable real estate which can deliver reliable, repetitive and growing income returns,' said Andrew Jones, chief executive of LondonMetric.
Croda said it would use the warehouse as its global distribution hub, investing a significant amount in a state-of-the-art automated facility. The 33 acre site will have a very low site density of 16% and there is planning consent for approximately 140,000 ft2 of additional development.
Construction commences imminently and is expected to complete in mid-2020. LondonMetric will forward fund the developer, db symmetry, benefiting from a 5.2% funding coupon.
'This latest distribution investment is let to a high quality occupier who is an existing customer of ours. It benefits from a very long lease at an attractive yield that is inflation linked and will further improve the quality of our portfolio as well as offer further occupier-led development potential,' Jones concluded.
