Tritax Big Box REIT has completed contracts with Prologis European Finance XI Sarl to acquire two modern big box logistics facilities at Prologis Park, Stoke-on-Trent, Staffordshire.
The combined net purchase price for the sheds, let to retailers Marks & Spencer and Dunelm, is £78.5m and will be funded from equity.
Stoke-on-Trent has attracted major distribution occupiers including Asda, JCB, Michelin, New Look, Sainsbury’s and TK Maxx and is connected to the M6 motorway to allow access to Birmingham and Manchester city airports and the Port of Liverpool.
The purchase price for the Marks & Spencer facility, built in 2008, reflects a 5.43% yield. The facility is one of M&S’s five national distribution centres for general merchandise and onward fulfilment to regional distribution centres, and has received substantial capital investment from the occupier. It has an eaves height of 12 metres, a gross internal floor area of 382,594 sq ft with a site cover of approximately 57%.
The property has been acquired with an unexpired lease term of around 8.5 years and has a lease break or rent review in 3.5 years. The lease is subject to five-yearly upward-only open-market rent reviews. The passing rent is £5.24 per sq ft.
The Dunelm facility comprises two interconnected buildings with a gross internal floor area totalling 503,389 sq ft. The net purchase price reflects a net initial yield of 5.38%.
These two Dunelm facilities, built to a high specification in 2004 and 2010, work in conjunction with the company’s new Dunelm National Distribution Centre in nearby Sideway, Stoke-on-Trent, which was forward funded by the company in June 2015, and together form Dunelm’s dedicated national distribution hub.
The properties are being acquired with two coterminous leases, each with an unexpired lease term of around three years. There are no further rent reviews. The passing rent is £4.56 per sq ft.
Colin Godfrey, partner, Tritax, said: “These facilities, situated in an established logistics location with two quality tenant covenants in M&S and Dunelm, build on our working relationship with both retailers.
“These value-add investments provide opportunity for rental growth and the short unexpired lease terms offer potential for capital value enhancement from either lease renewal or reletting. Value-add assets now comprise 17% of our portfolio by value.”
DTRE advised Prologis.
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