Tritax Big Box buys Kellog's Manchester distribution facility for £23.5m

Real estate investment trust Tritax Big Box bought a distribution facility in Manchester’s Trafford Park, which is currently let to food manufacturer Kellogg's, for £23.5m.

The £23.5m reflected a net yield of 5.9% on asset acquisition, and the is being funded from equity proceeds, with senior debt finance expected later.

It will have an unexpired lease term of about 1.75 years with a passing rent of £4.50 per square foot and a capital value cost equivalent to about £75 per square foot.

The property is one of three distribution and production facilities located at Trafford Park, one of the largest business parks in Europe, and is let to Kellogg's as it is close to its production facility at Barton Dock Road, which is Kellogg's largest manufacturing facility in Europe.

The property was built in 2007 and benefited from significant capital investment to improve racking efficiency. The facility has a gross internal floor area of 311,602 square foot and a site cover of about 46%.

Tritax partner Colin Godfrey, said: "Kellogg's is a world class company and we are delighted to add them to the very strong list of tenants in our portfolio. Trafford Park is a prime logistics location where we already own the L'Oréal distribution facility.

“The initial yield is accretive to our portfolio running yield and the short unexpired lease term presents an opportunity for value enhancement. This investment is highly reversionary, providing the potential for significant rental uplift upon re-letting or lease re-gear."

Shares in FTSE 250 listed Tritax Big Box were up 0.25% to 138.35p at 0916 BST.