Tritax buys distribution facility in southeast England at 5%

Tritax Big Box REIT is acquiring a 25,000 m2 distribution facility in the southeast of England for £37 mln (€51 mln), reflecting a net initial yield of 5%.

The Brake Bros Ltd distribution facility located in Harlow, Essex dates from 1989.

London-listed Tritax Big Box REIT has exchanged contracts to acquire the asset from a 50:50 joint venture of UK REIT LondonMetric and Middle Eastern group Green Park Investments.

The joint venture had acquired the distribution property in August 2011 for £22.9 mln. Last year, food retailer Tesco vacated the 6.8-hectare site and LondonMetric relet it to food and beverages company Brake Bros on a new 25-year lease subject to retail price index uplifts of between 0-5.0% per annum every five years.

The current passing rent is £1.8 mln pa which will be ‘topped up' to the next rent review, reflecting a 5.0% net initial yield for Tritax Big Box REIT.

LondonMetric
Following this disposal, LondonMetric’s distribution portfolio (including developments) totals £598 mln in 22 distribution centres with a weighted average unexpired lease term of 14.4 years and with 51% of income subject to fixed uplift or RPI increases. The distribution portfolio is now the group’s largest sector representing over 45% of the total portfolio.

Andrew Jones, CEO of LondonMetric, commented: 'This is a very good asset that has been a strong performer for us and our partner. It further demonstrates our ability to actively manage our portfolio to create well-let institutional property. Once we completed the asset management initiative at the end of last year we were always prepared to monetise our position and will now look to reinvest the proceeds into other accretive distribution assets where we can work with our customers to deliver further shareholder value.'

Tritax Big Box REIT was advised by DTRE. LondonMetric represented the joint venture.