Mon, 23 Jan 2023 | COMMERCIAL PROPERTY
Last mile logistics property firm Urban Logistics REIT has continued its acquisitive growth, buying five new assets for a total cost of £48 million at a 6 per cent net initial yield. The firm has acquired a £39.5 million portfolio of four units at a blended 6.1 per cent initial yield and a separate fifth unit for £8.7 million at a 5.8 per cent net initial yield.
The acquisitions come at a time of ongoing M&A activity in the UK logistics sector, as operators turn to dealmaking to build scale and expand their geographic presence amid a wide array of headwinds that are impacting the industry. M&A in the logistics property space, meanwhile, continues to be driven by the shift away from high street shopping to e-commerce, which has lead to intense competition for last-mile logistics units and warehouses in prime locations.
The four assets in the portfolio comprise: a 95,352 sq ft unit in Redditch, Worcestershire, currently let to Carpet and Flooring (Trading) Limited on a lease ending 2027; a 112,586 sq ft unit in Droitwich, let to Amazon UK Services on a lease to 2026; a 113,071 sq ft unit in Southampton, leased to Delamode Logistics Limited on a lease ending 2024; a 81,699 sq ft unit in Rugby, let to Volvo Group UK Ltd on a lease ending 2026.
The fifth asset is a 63,488 sq ft warehouse unit in Thatcham, currently let to Offsite Storage and Integrated Services Ltd on a lease to 2029. The warehouse is situated in a prime location close to junction 12 of the M4.
Commenting on the deals, Urban Logistics CEO Richard Moffitt said: "In the period since 30th September 2022, we have selectively deployed capital into assets which provide immediate income at a very attractive yield and provide the potential for value enhancing mid-term asset management opportunities.”
Along with the acquisitions, the firm has announced that it has completed two new lettings, leasing a 21,875 sq ft unit in Sittingbourne, Kent to Sign Trade Supplies Ltd and a 56,385 sq ft unit in Peterborough to 2Excel Ltd. It has also restructured two existing leases, removing breaks, and has commenced a pre-let lease on a 120,815 sq ft unit in Warrington to Master Removers Ltd.
Additionally, the firm has added a further 239,235 sq ft of logistics space to its portfolio after reaching practical completion on five units of its forward funded developments.
Richard Moffitt added: "We have also been able to achieve significant rental uplifts on new lettings, demonstrating the quality of our existing portfolio and proving our asset management strategy.”
"In addition, we have completed five developments in this period on time and on budget providing a very attractive yield on cost and demonstrating an additional route through which we can deliver returns for shareholders."
Find out more about M&A in the UK logistics sector:
Logistics firms targeting acquisitions despite falling confidence.
How the high street decline is driving a shift in the commercial property market.
Read about another recent Urban Logistics acquisition.
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