Tritax Big Box REIT has completed the land purchase and exchanged contracts to provide forward funding for a new distribution facility in the British Midlands for £52.7 mln (€62 mln).
The price reflects a net initial yield of 5.5%.
The 50,0000 m2 shed, pre-let to trade tools retailer Screwfix Direct, is being built at Prologis Park Fradley in Staffordshire.
'This investment which is accretive to our dividend is a good addition to our portfolio, offering tenant and business sector diversification with a strong covenant. The property is located within the Golden Triangle for UK logistics, which is seeing positive rental growth. This represents our eighth pre-let forward funded development and brings our total portfolio to 35 assets,' commented Colin Godfrey, partner of Tritax.
The new facility will include parking, offices and a site cover of approximately 48%. The development will be Screwfix’s fourth UK distribution centre.
Upon completion in October 2017, the property will be leased to Screwfix on a new 10-year lease, subject to five yearly upward-only open market rent reviews. During the construction phase, Tritax will receive an income return equivalent to the agreed rent from the developer.
The development is being undertaken by Winvic Construction and guaranteed by Prologis UK on behalf of Tango Real Estate, a joint venture vehicle between Prologis and Wittington Investments (Developments).
Tritax said the land purchase had been funded from equity proceeds, with senior debt finance to be introduced in the near term.
DTRE represented Tritax, and JLL represented the vendor.
