Warehouse REIT adds two more industrial properties to portfolio

Specialist warehouse investor Warehouse REIT announced the completion of two new acquisitions on Wednesday, as it continued to grow its portfolio of urban warehouse assets following the successful capital raise in April, which created more than £120m of “acquisition firepower”.

The AIM-traded firm said the acquisitions comprised a warehouse property in Chorley, Lancashire for £3.6m, and an industrial warehouse premises in Doncaster, South Yorkshire for £1.68m, extending its current holding at the same estate.

It said the two separate transactions were in line with its strategy of acquiring well-specified warehouses close to conurbations, arterial routes or transport hubs, with the combined acquisition prices reflecting a blended net initial yield of 6.8%.

The Lancashire asset was the larger of the two acquisitions at 47,500 square feet.

Warehouse REIT said the modern, purpose-built warehouse unit at Eaton Point was in the “well-established” distribution location of Chorley, being one mile from the M6 and 27 miles north west of Manchester, with numerous national warehouse occupiers operating in its immediate vicinity, such as Waitrose.

The property, which recently underwent a complete refurbishment, was let to an unnamed established manufacturing business as its distribution centre, generating a net passing rent of just over £260,000 per annum, with 4.5 years remaining on the lease.

In its second acquisition, the company purchased units one and two of the Delta Court estate within the Sky Business Park in Doncaster.

That transaction increased Warehouse REIT's holding on the estate, where it already owned 36,000 square feet across six units, and had enjoyed “strong” performance to date.

The company said the asset comprised more than 20,656 square feet of modern industrial warehouse space with roller access doors, two-storey internal offices and “generous” parking provisions.

It said the acquisition formed a sale-and-leaseback with a sign production company on a new 10-year lease, with a break at year five, off a low passing rent of £5.81 per square foot, which compared “favourably” to lettings that the firm had recently achieved on the estate.

Sky Business Park is situated with good access to the M18 motorway, and adjacent to Doncaster Sheffield Airport where cargo throughput tonnage increased by 42% last year, reflecting the growth of Doncaster as a UK distribution hub.

“These latest transactions demonstrate our market-leading origination capabilities, as we remain wholly focused on both growing and continuously enhancing the company's portfolio of high quality urban warehouse assets,” said Andrew Bird of Warehouse REIT’s managers Tilstone.

“The two acquisitions extend the efficient deployment of funds following the recent fundraising whilst providing the company with increased exposure to the north of England's strongly performing warehouse market, which continues to see good levels of both investor and tenant demand.

“We look forward to integrating these assets into the company's wider portfolio while we continue to source new opportunities, at both an investment and asset management level, in order to maximise the income returns the company delivers for shareholders.”