SEGRO has bought a 256,000 sq ft urban warehouse estate in west London from Schroders for £140m, while selling the fund manager a portfolio of UK big-box and urban assets totalling 880,000 sq ft for £205m.
The swap sees Schroders pay £65m to SEGRO.
The asset acquired by SEGRO is Matrix Park, a fully let urban warehouse estate in Park Royal, west London, close to existing SEGRO assets and the A40. The estate also includes a 1.4-acre development site. Based on current passing rent and lease reviews and renewals under discussion, the estate generates a passing rent of £4.1m and has an average WAULT of five years.
The portfolio acquired by Schroders consists of two stand-alone, fully let big-box assets in Hams Hall, Birmingham and Brackmills, Northampton as well as four urban assets including multi-level warehouse X2 close to Heathrow Airport, Oakwood in Park Royal, Advent Way in north London and a cross-dock warehouse in Radlett. Based on current passing rent and lease reviews and renewals under discussion the portfolio generates a passing rent of £7.5m and has an average WAULT of six years.
David Proctor, managing director of group investment at SEGRO, said: “This off-market transaction has allowed us to acquire a significant multi-let industrial estate in one of our core markets, offering strong rental growth potential as well as a medium to long-term redevelopment opportunity. At the same time we have been able to divest a number of relatively small holdings, all of which were earmarked for disposal in the near to medium term.”
Rob Cosslett, deputy fund manager for Schroder UK Real Estate Fund, Schroders Capital, said: “This landmark transaction with SEGRO is in line with several key strategic targets for SREF, including growing the fund’s income returns, increasing exposure to the industrial sector, strengthening future capital performance potential, and improving portfolio sustainability credentials.
“The UK industrial sector continues to thrive due to the acceleration of the shift in consumer behaviours over the last 18 months, which we expect will continue longer term. This has led to an unwavering demand from occupiers for strategically located, edge-of-conurbation, last-mile facilities.
“The portfolio we have acquired consists of six high-quality assets in strategic locations, close to major cities such as London and Birmingham, which we anticipate will benefit from longer-term rental growth and can deliver resilient income to the fund going forwards.”
Cosslett added: “We have several considerable development and capex projects underway or due to begin imminently in Croydon and Cambridge and also at our industrial schemes in Hartlebury, Wolverhampton and Crayford. The capital generated from the sale of Electra is maintaining the progress of these projects so that we can seek to continually deliver strong returns for our investors.”
SEGRO was advised by Montagu Evans; Gerald Eve acted for Schroders.
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