12 April 2017
Essex
Reporter: Theo Andrew

AEW UK bags Essex industrial unit


AEW UK REIT has acquired a multi-let industrial building in Basildon, Essex in an off-market deal, for £4.55 million.

The 69,000-square foot warehouse, located in the Cranes Farm industrial area, reflects a net initial yield of 7.8 percent and a capital value of £66 per square foot.

Fully let to four tenants, it has a weighted average unexpired lease term of under four years to lease breaks and six years to expiry.

According to AEW, current rents for the property sit below the local market average at £5.50 per square foot, presenting an opportunity for the rental income uplift for the company.

The property is located next to the A127, allowing easy access to Junction 29 of the M25.

Alex Short, portfolio manager at AEW UK Investment Management LLP, said: “Basildon has seen strong commercial rental performance over the past 18 months, driven by a supply-demand imbalance, and as such, prime and secondary rents in the town now sit at £8.50 per square foot and £6.75 per square foot, respectively.”

He added: “Furthermore, we believe that the acquisition pricing is well supported by the asset’s underlying vacant possession value, highlighting the strength of the occupational market in this location.”

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