Tritax Big Box adds three large properties

Tritax Big Box announced on Monday that it has exchanged contracts to acquire three properties in Harlow, Worksop and Carlisle Lake District Airport on Monday.

The FTSE 250 firm said the first property, a logistics facility at Harlow Logistics Hub on Edinburgh Way in Harlow is let to logistics business Wincanton Holdings and independent power tools supplier Industrial Tool Services.

It said the total consideration was £44.4m, and was being funded from equity.

The board said the property is “strategically positioned” close to the M11, the M25 and Central London, providing distribution reach across the South East with “excellent connectivity” to the wider national road network and transport infrastructure.

Harlow, which it described as a “key South East logistics location”, has attracted major occupiers including Bidvest, Clipper Logistics, DHL, Poundland and Brakes Bros - whose facility was acquired by the company in April 2015.

Built in 2008, Tritax said the modern, high specification logistics unit had a total gross internal area of 390,092 square feet and an eaves height of 11.5 metres.

The property is let to the two tenants under two separate leases, with Wincanton representing 62% of the rent and ITS representing 38%.

Wincanton operates an IKEA distribution contract from the facility, while it represents one of ITS's two logistics warehouses for national distribution.

Tritax said Wincanton's lease has an unexpired term of around 4.5 years with no rent review.

The lease with ITS has an unexpired term of approximately 14 years with a lease break in approximately nine years, and is subject to annual upward-only rent reviews index linked to the retail price index, collared at 1% and capped at 2%.

“We are very pleased to have acquired this modern facility in a key South East distribution location,” said Tritax partner Colin Godfrey.

“The South East has a high demand from occupiers requiring close access to London, but limited supply due to competition from high value alternative land uses.

“The investment further diversifies our portfolio tenant mix and also provides opportunity for rental growth and capital value enhancement from either lease renewal or re-letting.”

Tritax said the other two acquisitions in Nottinghamshire and Cumbria were with a single vendor, for a combined purchase price of £43.86m.

The first was the Cerealto National Distribution Centre at Dukeries Industrial Estate in Worksop, Nottinghamshire, let to Cerealto UK and guaranteed by its ultimate parent company, global private label food manufacturer Grupo Siro Corporativo.

Tritax said the total consideration was £20.25m excluding purchaser's costs, reflecting a net initial yield of 6.62% on the corporate acquisition.

Purpose-built to a high specification in 2007, it said the modern facility was Cerealto's only UK distribution and production facility from which it operates a new contract with a “major UK supermarket” as well as with other businesses.

The property, which reportedly benefited from significant capital investment from the tenant, has a gross internal floor area of 330,807 square feet, an eaves height of 12 metres, a substantial yard area with extensive parking, and a site cover of approximately 48%.

It said Worksop is an established logistics location with close proximity to both the M1 motorway and the A1, with “excellent connectivity” to the wider national road network.

Worksop is also an established commercial centre and has attracted major occupiers including Scania, Veolia, Wilko, as well as the National Distribution Centre of B&Q, acquired by the company in May 2015.

The property has been acquired with an unexpired lease term of approximately 18 years, with a fixed rental uplift to £4.25 per square feet at the review in September 2020, which would be regarded as reversionary against current market rents in this location.

After 2020, the rent would be reviewed five-yearly to open market rent reviews.

The final acquisition was the Stobart Group Regional Distribution Centre at Carlisle Lake District Airport, Cumbria, for total consideration of £23.61m excluding purchaser's costs, reflecting a net initial yield of 5.31% on the corporate acquisition.

That facility was also purpose-built to a high specification in 2015, used by Stobart Group as its regional distribution centre, from which it fulfils a contract for its longest standing customer, an unnamed “leading packaging supplier”.

The property has a gross internal floor area of 314,981 square feet, an eaves height of 12.5 metres, a “substantial” yard area with extensive parking and a site cover of approximately 43%.

Tritax said the property is located at Carlisle Lake District Airport, which is owned by Stobart Group.

It is also in close proximity to the M6 motorway, providing “excellent” road connectivity to both South West Scotland and the Border regions as well as the remainder of England.

Carlisle is where Stobart Group was founded and is headquartered, with the facility being the first property on a “potentially much larger” future logistics park.

The property was being acquired with an unexpired lease term certain of approximately 18 years, subject to annual upward only rent reviews indexed to the Retail Price Index, collared at 1% and capped at 3.5%.

Tritax said the next rent review was due in February 2021.

“We are very pleased to have acquired these two modern logistics facilities, each providing long term 18 year income with good opportunities for rental growth,” Colin Godfrey added.

“These investments add two new quality tenants, which we welcome to our portfolio, whilst also providing geographic and business sector diversification.”