AEW UK Long Lease takes on Merseyside industrual estate

AEW UK Long Lease announced the acquisition of Pocket Nook Industrial Estate, St Helens for £9.0m on Tuesday, reflecting a net initial yield of 5.4%.

The recently-registered real estate investment trust said the 16.1 acre site is let to three tenants, and provides a weighted average unexpired lease term of 66 years to expiry, with 49% of the income let to Biffa Waste Services until 2134.

It said the estate comprises two industrial units, a small office with a large yard and an area of storage land, with an additional unit currently under construction by the vendor and pre-let to Biffa.

A total of 76% of the income is backed by the “strong covenants” of Biffa and the Driving Standards Agency on uncapped RPI-linked leases that are reviewed five-yearly, AEW’s board explained.

The Merseyside site is located 0.8 miles away from St Helens town centre, benefitting from its proximity to the M57, M6 and M62 motorways.

“This industrial site adds to the diversity of our growing portfolio of properties, which so far includes two hotels, a waterpark and a gym,” said SEW UK Investment Management director and AEW Long Lease portfolio manager Alex Short.

“We are also pleased by the strength of the income that this asset provides and, in particular, Biffa's increasing commitment to the location with the addition of a second unit.”

The transaction increased the total amount invested by AEW UK Long Lease since listing to £31.1m.

In addition to that, the manager reportedly has a further six assets under offer, and expected to make additional announcements in the coming weeks.

AEW UK Long Lease raised £80.5m from institutional and retail investors at its IPO in June, and at that time it stated its expectation to “substantially invest” the net proceeds within nine months of listing.

The company said it was targeting an annual dividend of 5.5p per share paid quarterly, once fully invested and levered, with an ambition to grow in line with UK inflation thereafter.

The Company entered the REIT regime with effect from 13 October, following the submission of the application to HM Revenue and Customs.