SEGRO and Roxhill have closed their deal to create a portfolio of more than 10m sq ft of big-box logistics properties.
As revealed by Estates Gazette, the sites have an end value of £800m and are located in the South East and Midlands. They will be built out over a 10-year period.
Roxhill Management Rugby will act as development manager to the new partnership and will work exclusively with SEGRO once Roxhill has completed a number of existing development projects with other partners.
An initial investment, the majority of which is deferred, will be payable in consideration for a 50% share of Roxhill’s interests in options over the sites. The deferred payment is due on each site as and when planning permission is granted, at which point SEGRO has the right to buy Roxhill’s remaining interests in the sites. Under the terms of the agreement, SEGRO will fund planning fees and development management costs.
After a period of 30 months from completion, SEGRO has the right to acquire all of Roxhill’s remaining option interests as well as the management platform, RMRL.
The developments should generate an estimated blended yield on cost of around 7% at today’s rental levels.
SEGRO said: “The terms of the transaction allow SEGRO significant flexibility over the timing of development and avoids the initial drag of holding non income-producing land on its balance sheet.”
SEGRO’s chief executive, David Sleath, said: “Roxhill is a market-leading developer and a partner we know, trust and for whom we have a high regard. This partnership establishes a clear path for us to achieve the scale we desire in the attractive UK big-box logistics market. We are convinced that this market has very favourable long-term prospects given the lack of quality supply and increasing demand from retailers and logistics operators for modern space in the right locations.”
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