AEW UK REIT, which owns a diversified portfolio of 29 regional UK commercial property assets, announces the acquisition of a ca. 69,000 ft² multi-let industrial building in Basildon, Essex, for €5.36m (£4.55m), reflecting a high Net Initial Yield of 7.8% and a capital value of ca. €77 (£66) per ft².
The warehouse, which is located within the established Cranes Farm Industrial area, is fully let to four tenants, providing a WAULT of just under 4 years to lease breaks and 6 years to expiry. The current lettings show an average passing rent of €6.48 (£5.50) per ft² which is significantly below the local market average and as such, the building presents an opportunity for near-term rental income uplift through asset management. The site is strategically located adjacent to the A127, which provides quick vehicular access to Junction 29 of the M25.
Commenting on the deal, Alex Short, the Company’s Portfolio Manager at AEW UK Investment Management LLP, said, “This off-market acquisition of a well-located, multi-let industrial asset in the South East of England offers both an attractive day one yield and the potential to improve the income profile over a short timeframe, whilst also demonstrating our strong origination capabilities. Basildon has seen strong commercial rental performance over the past 18 months, driven by a supply demand imbalance, and as such, prime and secondary rents in the town now sit at €10 (£8.50) per ft² and €7.95 (£6.75) per ft² respectively. Furthermore, we believe that the acquisition pricing is well supported by the asset’s underlying vacant possession value, highlighting the strength of the occupational market in this location.”
Following the acquisition, the Company has invested a total of ca. €156.7m (£133m) across 29 regional commercial property assets and has a €8.77m (£7.44m) investment in AEW UK's Core Property Fund.