Urban Logistics REIT has exchanged contracts with Wilson Bowden Developments to buy two warehouse development sites in Nottingham and Leicester through a £23m forward funding deal.
The deal, which is subject to planning permissions, will be financed from a combination of cash resources, proceeds from disposals and debt financing. Development yield on cost stands at 6.1%.
The 8.1-acre site at Blenheim Park, Nottingham, will comprise four properties with a total gross internal floor area of 166,330 sq ft.
The 2.5-acre development at Optimus Point, Leicester, measures 2.5 acres and will offer one unit with a 43,850 sq ft GIA.
Construction is expected to commence in September 2021. During the build the company expects to benefit from a 5.5% interest rate coupon on the forward funding provided.
Practical completion is anticipated between September 2022 and February 2023. The REIT has an option over two further sites until July 2021 which it said are also “in locations seeing strong rental growth and yield compression for new grade-A stock”.
Richard Moffitt, chief executive of Urban Logistics REIT, said: “Covid-19 has highlighted the importance of warehousing and logistics real estate, especially the scarce, high-quality, single-occupier regional and last-mile urban properties on which the company focuses.
“The development programme announced today, which we have sourced off-market, will add further high-quality new assets to the company’s portfolio at a time when smaller urban logistics warehouses are in short supply.
“Given the strength of demand for space from occupiers seeking representation in the East Midlands market, we expect to achieve favourable lease terms on each of the assets with high-quality tenant counterparties.”
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