Property investor SEGRO has completed a £70m acquisition and exchange agreement involving a 390,000 sq ft warehouse unit in the Midlands.
The warehouse acquired by SEGRO is located in Crick, a prime location close to junction 18 of the M1 motorway. The unit is 390,000 sq ft and is let to Butcher’s Pet Care Limited for a further 19 years without break. Butcher’s Pet Care is one of the UK’s leading producers of pet food and this facility is the company’s only UK presence. Butcher’s Pet Care have been located in Crick since 1976. The warehouse, was constructed in 2010 and subsequently extended in 2016 to accommodate the tenant’s expansion. The transaction price of £41.3 million reflects a net initial yield of 5.0 per cent and offers reversionary potential compared to current rental levels for modern warehousing in the area. As part of the transaction, SEGRO will also receive a balancing cash payment.
Kingsland Business Park comprises 50 buildings totalling 676,300 sq ft and is located two miles from Basingstoke town centre and three miles from the M3 motorway. The estate has an average lease length of approximately three years and a vacancy rate of less than 5 per cent. The transaction price of £70.0 million reflects a net initial yield of 5.9 per cent.
Phil Redding, Chief Investment Officer of SEGRO, commented: “This is SEGRO’s ninth asset swap, enabling us to focus our portfolio on our core areas and asset types, in particular on big box warehouses in the Midlands and urban warehouses in London and the Thames Valley, whilst mitigating the impact of a disposal on income.”
Mark Russell, Senior Fund Manager of LGIM Real Assets, said: “This off-market deal allows us to increase our exposure to south east industrials and to bolster our pipeline of asset management initiatives, complementing wider portfolio activities. The deal as structured also facilitates a net investment for our investors.”
DTRE acted for SEGRO and JLL acted for Legal & General.