Tritax Big Box acquires Amazon distribution centre in Peterborough

Tritax Big Box has acquired one of Amazon's largest UK distribution centres for a purchase price of £42.9m, which is let to the US online retail behemoth with on an 8.7-year lease and a net initial yield of 5.6%.

FTSE 250-listed Tritax, welcoming Amazon as a client for the first time, funded the purchase from equity proceeds and expects to introduce senior debt finance in the near term.

The building, which was built in Peterborough's Kingston Park in 2006, is used by Amazon to fulfil general merchandise online orders and groceries throughout the UK and Europe.

"The asset is important to Amazon which has committed significant capital into its fit out of the facility," said Tritax partner Colin Godfrey. "This investment is a strong addition to our portfolio, now comprising of 31 big box logistics assets, and was acquired at a level which is accretive to our portfolio's current average net initial yield.

"It also further diversifies and strengthens our tenant and geographic mix, with opportunities for potential asset management."

The distribution centre, which has a gross internal floor area of 549,788 sq ft, is "well positioned in a core logistics location with excellent motorway connectivity across the UK", Tritax said, with the business park located just off the A1M, with close links to the M1 and A14.

The property, where the passing rent is roughly £4.50 per sq ft with a capital value cost equivalent to approximately £78 per square foot, is being acquired with an unexpired lease term of approximately 8.7 years subject to five yearly upward only rent reviews indexed to the CPI, with the next rent review due in April 2020.

Amazon has seven other 'fulfilment centres' throughout the UK. in Doncaster, Dunfermline, Gourock, Hemel Hempstead, Marston Gate, Rugeley and Swansea, with the largest in Dunfermline being 1m sq ft, or the size of 14 football pitches.