Warehouse REIT acquires assets in Staffordshire and Carlisle

Specialist warehouse investor Warehouse REIT has exchanged contracts to acquire two separate assets - one in Stone, Staffordshire and the other in Carlisle - and completed on a site acquisition in Banbury, Oxfordshire.

The AIM-traded firm said the aggregate purchase price for the three transactions was £5.3m.

It also announced that, in line with the IPO prospectus, it secured “new and enlarged” financing facilities totalling £65m with HSBC, to be used to fund pipeline acquisitions.

On the acquisitions, Warehouse said that at Stone Business Park, it acquired four industrial units on the Walton Industrial Estate from a private investor for £3.7m, reflecting a net initial yield of 7.3%.

Occupying a 5.5 acre site, the units totalled 57,500 square feet, with average passing rents of £5.09 per square foot.

Fixed uplifts in one of the leases would increase the passing rent by 16% over the next four years.

“Significant capital investment by the tenants, including e-commerce packager Woolcool and utility provider Capula, demonstrates their long-term commitment to the site, whilst the low site density of 24% offers medium-term opportunities to enhance the asset,” Warehouse’s board explained.

“Located on the A34, which provides quick access to the M6, the North West's main arterial route, other occupiers on the business park include Royal Mail, Aldi and XPO Logistics.”

At Carlisle, Warehouse said it acquired two multi-let trade counters totalling 13,800 square feet, from a private vendor for £0.8m, reflecting a net initial yield of 8.25%.

The one acre property was situated adjacent to its existing 12,000 square foot holding.

Warehouse said the site occupies a “prominent corner position” at the intersection of two main roads, approximately one mile south of Carlisle city centre, providing the opportunity to merge the car parking with the adjacent unit to enhance access and circulation for tenants at both holdings.

Currently let to two tenants at a historic rent of less than £5 per square foot, the board said the property offered “significant” reversionary potential, with unit 1 benefitting from a fixed 40% rental increase next year.

Finally, Warehouse confirmed it completed the acquisition of a six-acre site in Banbury, Oxfordshire, occupied by Banbury FC, for £0.8m.

The site is located adjacent to the company's existing 150,000 square foot Tramway Industrial Estate, with the enlarged 13-acre strategic holding providing medium to long term mixed-use redevelopment options.

“Following these transactions, Warehouse REIT has invested [more than] £140m in its pipeline of warehouse assets, including completing the four acquisitions totalling £26.25m [as] announced on 25 September,” the board commented.

Additionally, the board said its HSBC refinancing was replacing £44.3m of debt facilities which were secured against its initial seed portfolio from the same lender.

The refinancing comprised an increased five-year term loan facility of £30m at a reduced interest rate of 2.25% above LIBOR, and a new £35m five-year revolving credit facility at an interest rate of 2.4%, also above LIBOR.

“These new acquisitions fit with our investment strategy of acquiring assets that are either located in urban areas or on infrastructure links, and whilst they already offer a good income return they also present opportunities to leverage our asset managers' expertise to drive further value over the longer term,” said Warehouse executive chairman Neil Kirton.

“Combined with our successful refinancing, today's news is a further example of the business delivering on its stated strategy as set out at the time of our listing in September 2017, and we look forward to working through our exciting pipeline of further opportunities and building our exposure to the fast-growing Tier 3 warehouse sector.”