Warehouse REIT agrees to buy Bradwell Abbey estate

Warehouse REIT has exchanged contracts to acquire Bradwell Abbey Industrial Estate, it announced on Thursday, for £62m excluding acquisition costs.

The AIM-traded real estate investment trust said the purchase price reflected a net initial yield of 4%, based on day-one passing or guaranteed income, and continued its stated aim of acquiring assets in the Oxford-Cambridge ‘Arc’.

It said the multi-let industrial estate contained 69 units across 335,000 square feet, ranging from 1,000 to 15,000 square feet in size each.

The estate is just off the A5, providing access to the surrounding population of Milton Keynes and the wider motorway network, with the M1 being six miles to the east.

Warehouse REIT said the estate was currently 96% leased to a range of occupiers including Argos, F&F Stores and Taylor Kerr Engineering, and produced total annual income of more than £2.6m.

The low average rent of £7.80 per square foot offered good reversionary potential, the board said, considering prime rents in the area ranged from £10 to £14 per square foot.

Milton Keynes was described by the company as a “highly sought-after” industrial location, with vacancy sitting at around 4%.

Significant residential growth was putting further pressure on both demand and underpinning land values, providing further rental growth potential.

“This acquisition provides Warehouse REIT with clear opportunities to generate upside through strategic capital expenditure and working with the existing occupiers,” said Andrew Bird, managing director of the company’s investment advisor Tilstone Partners.

“We intend to refurbish units as they become available, improving the estate's sustainability credentials, enabling us to capture new rental levels which will help drive future rents across the estate and strengthen the covenant profile.”

Bird described the ‘Arc’ as one of Warehouse REIT's favoured locations, with its industrial markets characterised by an “acute” supply-demand imbalance driven by the growing dual demand from both industrial, and science and technology occupiers.

“With supply failing to keep up with record levels of take up, land values have increased rapidly and strong rental growth is forecast.”

At 1059 BST, shares in Warehouse REIT were up 0.12% at 171.4p.