10 August 2017
London
Reporter: Theo Andrew

LondonMetric strengthens UK logistics portfolio for £166.6 million


LondonMetric has acquired a portfolio of 14 warehouses from Cabot Properties for £166.6 million.

The 1.3 million-square metre portfolio is fully-let and generates an annual rental income of £7.2 million, representing a day one yield of 6.1 percent and a revisionary yield of 6.6 percent.

Half of the portfolio is located in the southeast and the Midlands, the latter a region which has accounted for 43.1 percent of national take-up in the first half of 2017, according to a BNP Paribas report.

Of the 14 properties, 11 are ‘last mile’ logistic warehouses, with tenants including DHL, Howdens and Royal Mail. The portfolio holds a weighted annual unexpected lease term of 5.6 years.

According to LondonMetric, the acquisition increases its distribution weighting to 69 percent and loan to value ratio to 37 percent.

Andrew Jones, chief executive of LondonMetric, said: “Following recent non-core disposals of Milford Haven, Loughborough and Marlow totalling £116.3 million, we are pleased to have re-invested the sale proceeds into the distribution sector within such a quick timescale.”

“The urban logistics market continues to benefit from a highly favourable demand/supply imbalance. The acquired portfolio is fully income generating and offers good opportunities to extend lease lengths and capture strong income growth.”

In May, the FTSE 250 REIT acquired three logistics warehouses across the UK for a total of £23.9 million, while the latest acquisition brings LondonMetric’s logistics portfolio to a value of £260 million across 38 assets.

Sustained demand in big box real estate saw investment into the UK logistics sector hit £2.7 billion in H1 2017, up 110 percent on H1 2016 and second only to the £3.8 billion invested in H1 2014, according to the BNP Paribas report.

JLL advised LondonMetric while Cabot Partners were advised by Accord Capital Partners.

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