Blackstone and M7 Real Estate are to buy a portfolio of industrial estates from Brockton Capital and Dunedin Properties in a £559m off-market deal.
The duo has placed under offer 130 assets that were amassed by Brockton and Dunedin during 2014-15.
The portfolio has a headline rent roll of £37m a year which, if achieved, would reflect a yield of 6.62%.
The UK light industrial portfolio is being sold out of the £800m Brockton Capital Fund III, much of which was deployed on a rolling basis before reaching its final close in February last year.
The 7.9m sq ft of assets were originally acquired in three transactions. In October 2014, Brockton and Dunedin bought the Partridge portfolio from Columbus for £230m. That November, they bought the Hansteen UK Industrial Property Unit Trust in two transactions for £146.1m. Then in May 2015, they bought the Hansteen UK Industrial Property Unit Trust II for £192.1m.
Following these deals, the assets were consolidated into a single Jersey-listed property unit trust and the partners undertook asset management initiatives to reduce the void rate from around 11% to 8%. They also sold off around £100m of non-core offices that were inherited as part of the Partridge deal.
Dunedin was a minority co-investor alongside Brockton as well as asset manager.
Blackstone and M7 formed their Onyx European light industrial joint venture in January and agreed a €1.3bn deal to buy Hansteen’s Dutch and German portfolios in March. On the completion of the acquisition from Brockton and Dunedin, Onyx will have more than €2.2bn of assets under management.
Blackstone has started targeting the light industrial sector due to its relatively high-yielding nature and its potential to take advantage of trends in the e-commerce sector for last-mile delivery.
With rents at £4-5 per sq ft and strong tenant demand, Blackstone and M7 consider that there is still capacity for rental growth potential.
JLL is advising Blackstone and M7.
To send feedback, e-mail nick.johnstone@egi.co.uk or tweet @n_johnstone or @estatesgazette
