Urban Logistics deploys another £45m, agrees rent reviews

The FTSE 250 real estate investment trust said total deployment since the December fundraise now stood at £184m, at a blended net initial yield of 5.4%.

It had agreed five new lettings, three rent reviews and two lease regears in the period, covering 630,000 square feet of space.

Rent reviews and regears had been settled at a blended 13% increase over passing rent.

Urban Logistics said its first acquisition was the East Midlands Logistics Hub - a £40.7m asset acquired at a net initial yield of 6.8%, with “strong” reversionary potential and immediate asset management opportunities.

The board said the property consisted of a 72 acre site with four high-quality units, “substantial” yard space and land with the potential for a further 175,000 square feet of development.

It said the asset is located close to the A1 and the A46/M1, and would benefit from planned local infrastructure improvements.

Three large units, totalling 665,527 square feet, were let to Asfordby Storage and Haulage on a short-term lease, with the remaining unit of 6,773 square feet let to Royal Mail.

In Lincoln, Urban Logistics said it had purchased a £4.2m asset on Outer Circle Road, acquired at a net initial yield of 5.8%.

The property consists of a 25,924 square foot unit on a two-acre site, and was let to Wickes Building Supplies for a term of 10 years.

On the leasing front, the company signed an agreement for lease with Master Removers for 120,218 square feet of space in a new development in Golborne, Warrington.

The building was a new brownfield development, and was expected to complete in October.

Its board said the lease was at £7.75 per square foot for a term of 15 years.

A rent review was also settled with DHL Supply Chain on a unit of 31,410 square feet in Norwich.

The rent was agreed at £181,250, representing a 29% increase from the previous level

Finally, the firm agreed a lease with the Unipart Group on a 122,478 square foot asset in Runcorn, resulting in a new rent of £693,500, representing a 20% increase from the previous level.

“Our portfolio continues to grow at a substantial pace, having completed 14 transactions since our December equity raise,” said chief executive officer Richard Moffitt.

“As we look ahead, we are optimistic that we can continue to source attractive value accretive acquisitions that are strategically positioned in current and emerging logistics hubs.

“With these latest acquisitions, our blended net initial yield on all completed transactions since our fund raise in December 2021 is 5.4%, exactly as targeted during the raise.”

Moffitt said the East Midlands Logistics Hub (EMLH) near Melton Mowbray sat “very well” with some of its recent acquisitions, as it would provide balance to the portfolio in terms of long income and short-term asset management opportunities.

“We are already talking to occupiers about letting the campus location for fast moving consumer goods.

“We look forward to completing further acquisitions in the coming weeks and months and are on track to be fully-deployed on a geared basis by the end of June.”

Urban Logistics said it would report its annual results for the year ended 31 March on 23 June.

At 0815 BST, shares in Urban Logistics REIT were down 1.93% at 191.73p.