Tritax Big Box acquires huge Co-op facility

Real estate investment trust Tritax Big Box announced on Wednesday that it has exchanged contracts to acquire the distribution warehouse and adjacent lorry parking facility at Oliver Road, Thurrock, both let to The Co-operative Group.

The FTSE 250 firm said the purchase price for the is £56.5m, excluding purchaser's costs, reflecting a net initial yield of 5.53% on the asset acquisition.

Completion of the purchase is conditional on the successful completion of the fundraising announced by Tritax on 28 September, and is expected to occur on or around 20 October.

The Facility is one of the Co-op's six strategic UK distribution hubs, and the only one located in the South East, the Tritax board said.

It added that the distribution warehouse, built in 2005, has a gross internal area of 322,684 sq ft across 15.25 acres, reflecting a site cover of 48.6%.

The eave height is 15 metres, with ancillary offices, secure yards, decked parking and the benefit of significant capital investment from the tenant.

Tritax said the adjacent lorry parking facility, which has development potential and covers a separate 4.1 acres, was constructed in 2012.

The Facility is located just off J31 of the M25, benefiting from access to the wider motorway network including access to Central and Greater London and the South East as well as the deep sea ports of London Gateway and the Port of Tilbury.

Tritax said the facility is being acquired with a weighted average unexpired lease term of approximately 9.4 years on full repairing and insuring terms.

The distribution warehouse is subject to five-yearly upward-only rent reviews to the higher of either a guaranteed fixed uplift of 2% pa, or open market rent, while the lorry parking facility is let on five yearly fixed rent increases of 2.5% pa.

It confirmed that the next review for the warehouse is due in December 2020, with the next rent review for the lorry parking facility is due in May 2018.

“We are pleased to have acquired the Co-op's South East distribution facility at Thurrock, further diversifying our portfolio tenant mix with an established covenant in a core distribution location,” said Tritax partner Colin Godfrey.

“Prime quality Big Box logistics warehouses are in high demand from occupiers requiring close access to the densely populated London conurbations, but there are no units of this size or greater currently available to let around the M25 ring.”