UK REIT Segro has sold a portfolio of six UK industrial estates to Orchard Street Investment Management for £113.8 mln (€144 mln), reflecting a yield of 6.1% and a premium of 10% to the assets' book value at 30 June.
UK REIT Segro has sold a portfolio of six UK industrial estates to Orchard Street Investment Management for £113.8 mln (€144 mln), reflecting a yield of 6.1% and a premium of 10% to the assets' book value at 30 June.
The Orbital portfolio generates a passing rent of £6.4 mln, rising to £7.4 mln on expiry of rent-free periods and allowing for rent guarantees.
The portfolio comprises six multi-let industrial estates located around the M25 and M3 motorways with a combined floor space of 94,493 m2, spread across 97 units. The portfolio’s vacancy rate is around 9%.
'This disposal marks another important milestone as we continue to reshape our portfolio, leaving the UK non-core asset disposal programme virtually complete,' commented Phil Redding, Segro's chief investment officer.
The proceeds from the transaction will be used to reduce Segro's net debt in the short term and will also help fund its UK and Continental European development pipeline which should generate a fully let yield on development cost of over 9%, he added.
The six estates are located in Camberley, Frimley, West Thurrock, Hounslow, Woodford Green and Hemel Hempstead.
Orchard Street acquired the assets on behalf of St James’s Place.
Barney Rowe, Partner at Orchard Street, commented: 'This portfolio acquisition presents a rare opportunity for Orchard Street to gain a substantial foothold in the highly sought after South East industrial market. The strong level of tenant demand for these properties offers exciting prospects for future income growth throughout the portfolio.'
Orchard Street was advised by Knight Frank while Segro was advised by DTRE.
Separately, Orchard Street Investment Management also announced on Monday that it has secured a new £47.75 mln, five-year loan with pbb Deutsche Pfandbriefbank for St Andrew’s Quay Retail Park in Hull.
Orchard Street acquired St Andrew’s Quay on behalf of Orchard Street UK Prime Property Partnership in September 2014 for £96 mln from Threadneedle Investments. The purchase price reflected a net initial yield of 6.1%.