Legal & General Property agreed to pay a price for a shed this week with a yield that would not look out of place in London’s West End.
L&G Property has agreed terms with Gazeley to buy the 938,500 sq ft Waitrose national distribution centre, at Magna Park in Milton Keynes, for more than £112m – a 4.7% yield – in a deal that would set a record for the industrial sector.
The yield will eclipse recent high-profile West End deals such as Mitsubishi Estate Company’s £180m purchase of government-let 1-19 Victoria Street, SW1 – a 4.8% yield – and Shaftesbury’s £31m purchase of Jaeger House, W1, from Derwent London – a 6% yield.
A source said: “It is the mother of all sheds. It has to be the best shed in the country.”
Waitrose completed a 30-year letting with Gazeley for the shed last month, paying around £5.4m pa with fixed RPI uplifts.
One agent said the warehouse was more in line with a typical supermarket investment opportunity where yields hover around 4.75% to 5%.
The purchase would surpass Gazeley’s sale last August of the 670,000 sq ft second phase of John Lewis’ distribution centre at Magna Park in Milton Keynes to Aviva Investors for £74m, reflecting a 4.85% yield.
The pre-recession record was set in March 2007 when the Crown Estate bought John Lewis’s 650,000 sq ft first phase of its Milton Keynes distribution centre from a Gazeley and Land Securities jv for £72m – a 4.9% yield.
In January 2012, Tesco sold its 930,000 sq ft rail-connected distribution centre at the former Courage Brewery in Reading, Berkshire, in a sale-and-leaseback deal to L&G for £112m – the then highest price paid for a single industrial asset in the UK.
JLL, Burbage Realty and Savills are advising Gazeley; Cushman & Wakefield is representing L&G.
nick.whitten@estatesgazette.com
