Canmoor and James Caird Asset Management are banking on rental growth in the secondary industrial sector with a £120m joint bid for Project Hollywood.
The joint venture has agreed terms with Highcross to buy the portfolio of 20 sub-prime sheds in its third partnership to date.
The deal would be the largest completed by Canmoor since purchasing SEGRO’s £200m Merlin Portfolio in 2012 with Harbert.
Hollywood comprises 20 sheds that were spun out of Highcross when the business was put up for sale earlier this year so as not to deter buyers focused on the company’s prime assets.
They are spread across England Wales, Scotland and Northern Ireland and command a total rent roll of £13.7m.
Around 20% of the 4.1m sq ft portfolio is vacant and the average unexpired lease term is 2.5 years.
The £120m purchase price reflects a yield of 11.5%.
Canmoor manages standing stock covering around 11m sq ft, meaning the Hollywood purchase would increase its asset base by 37%.
The company has been aggressively targeting sub-prime sheds through a string of partnership agreements as it seeks to exploit its asset management expertise and cash in on rental growth in multilet sheds.
In October, the firm teamed up with BlackRock for a £150m partnership targeting the sector.
According to the latest figures from IPD, sheds have led the market in UK property returns, holding steady on Q2 performance to return 5.4% during Q3.
Highcross was founded by industrialist Sir Peter Michael in 1982, and was sold to Northwood Investors this summer following the retirement of managing director Peter Gubb.
Deloitte acted for Highcross; DTRE is advising Canmoor.
