Warehouse REIT adds another Amazon property to its books

Specialist warehouse investor Warehouse REIT has exchanged contracts for the acquisition of a “strategically-located” warehouse in Widnes, Cheshire for £2.77m, it announced on Wednesday, reflecting a net initial yield of 7.3%.

The AIM-traded company said the asset was fully let to Amazon UK Services on a newly-agreed five-year lease, to serve the online retailer's last mile distribution requirements across the surrounding North West region.

Amazon was now the second largest tenant on the firm’s rent roll.

The board said the “modern” warehouse facility contained 48,932 square feet of high-specification newly-refurbished space, including two-storey office accommodation and an electrically-operated loading bay, all set within a self-contained 2.5 acre site.

It said the asset was currently generating a “comparatively discounted” rental income of £216,432 per annum, or £4.42 per square foot, offering “attractive” growth prospects, while its low capital value of £56 per square foot was less than the cost of replacement.

The warehouse is located “in the heart of the North West”, the board explained, in a prominent location on the established Halebank Industrial Estate in Widnes, benefitting from good motorway access.

Widnes is approximately 14 minutes' drive time from Liverpool Airport, 30 minutes from both the Port of Liverpool and Manchester Airport, and 20 minutes from the M62/M6 interchange, offering good infrastructure provision for a logistics company.

The board said the asset's tenant was leveraging its strong location by using the facility to service the distribution of small items being offered for sale by ‘Amazon Sellers’.

“This transaction is in line with Warehouse REIT's strategic focus, being located in an established commercial location, close to urban centres and well connected by strong local transport infrastructure - exactly what ecommerce businesses are looking for from a warehouse facility, whilst also enabling us to benefit from the yield arbitrage following recent disposals of lower yielding assets,” said Andrew Bird, managing director at Warehouse REIT’s manager Tilstone Partners.

“The North West industrial market continues to see record levels of both investor and tenant demand, driven by strong occupational dynamics, a shortage of new development and the continued regional growth of the online retail market.”