Palmer Capital has bought the Debenhams Distribution Centre at Kingston in Peterborough for £86.4m in the largest single-asset logistics deal of the year.
The price paid by Palmer’s Saudi client reflects a 5.8% yield.
The property is a 736,708 sq ft distribution warehouse, which is wholly occupied for Debenhams with 12 years remaining on the lease. It was bought from investment firm DVS Property, which is owned by the north London-based Indian Shah family.
Debenhams has committed to investing £30m in refurbishing the centre, in line with its strategy to improve its online operations. The department store has been hit by falling profits over the past year as it struggles to adapt its high street department store model to current consumer trends.
Charles Allen, acquisitions director at Palmer Capital, said: “This asset is a perfect match for our Gulf Co-operation Council client’s income requirement and demonstrates its ongoing commitment to the UK. The larger lot size and fixed annual rental uplifts made the deal work for our client’s requirement.”
DVS started investing in the distribution warehouse market more than a decade ago and has now begun realising its investments as the pricing for the sector has since surged.
In 2014 it sold the 726,000 sq ft Currys Distribution Centre in Newark, Nottinghamshire, to London Metric for £68.5m and last year it sold the 653,670 sq ft Argos Distribution Centre in Barton, Staffordshire, to Tritax Big Box REIT for £74.6m.
David Baroukh, founder of David Baroukh Associates, which represented DVS Property, said: “We have acted for DVS Property, a well-established family office, for more than 15 years. Their very early foresight into large big-box investments has led to more than £550m of transactions in this sector over the past 10-12 years. Their decision to exit individual assets within the portfolio is strategically timed, maximising both on M&A activity as well as the strength of the sector.”
Palmer Capital was advised by GVA.
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