UK REIT London & Stamford Property (LSP) has announced the £123 mln (EUR 144 mln) acquisition of a prime distribution portfolio in the UK. The vendor is a subsidiary of European Property Investors Special Opportunities (EPISO), an opportunistic property fund co-advised by AEW Europe and Tristan Capital Partners.
UK REIT London & Stamford Property (LSP) has announced the £123 mln (EUR 144 mln) acquisition of a prime distribution portfolio in the UK. The vendor is a subsidiary of European Property Investors Special Opportunities (EPISO), an opportunistic property fund co-advised by AEW Europe and Tristan Capital Partners.
Ric Lewis, CEO of Tristan Capital Partners, said: 'At the height of the recent downturn, we took advantage of our strong equity to make key
acquisitions for the fund. We intended to hold these assets in the fund for quite some time but the financial advantages to the fund of agreeing this sale were too compelling.' King Sturge acted on EPISO's behalf for the sale.
The portfolio comprises five distribution units totalling 91,600 m2 let to five tenants: the Metropolitan Police Authority, Royal Mail Group, Kuehne & Nagel, Ceva Freight (UK) and Pearson. The weighted average unexpired lease term is 12 years. The annual rent roll is £8.7 mln of which 67% is from four buildings located within the M25 in west London, close to Heathrow. The remaining income derives from a unit located in Rugby, within the Midland's 'Golden Triangle' for distribution assets.
LSP has committed £64 mln of cash to complete the acquisition.
This is LSP's second investment transaction in the distribution property segment this month. Earlier in November, the company announced the acquisition of the Lojix distribution portfolio from Harbert Management Corporation (Europe) for £82 mln. The two transactions bring the total outlay to £205 mln with gearing of around 50%.
LSP also announced on Thursday that it has reached agreement with its existing joint venture partners in the Middle East, Green Park Investments, under which they will increase the available equity funding to the joint venture by £100 mln. Following the purchase by the joint venture of a 50% share in Meadowhall shopping centre in Sheffield in 2009, some £80 mln of the initial commitment remained to be invested. That amount will now increase to £180 mln.
LSP and Green Park Investments said they have secured respective approvals for this combined distribution portfolio to be taken into the joint venture on a 50:50 basis. At the present time the cash on cash yield on the combined portfolio is 9.27%
The parties intend to refinance this combined portfolio in the joint venture and it is estimated that when that is concluded, which should be early in 2011, the cash on cash yield is expected to be in excess of 11% and the amount of equity invested by London & Stamford will reduce to £42 mln leaving firepower of about £1 bn, inclusive of the remaining commitment of the joint venture partners of about £140 mln.\
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