LondonMetric Property has agreed to purchase and fund a new 232,000ft² distribution warehouse for €26.2m (£24m), reflecting a yield on cost of 5.2%. The asset has been pre-let to Croda on a 20-year lease at a rent of €1.4m (£1.3m) pa subject to annually payable RPI linked rental uplifts of between 1% and 3% pa.
Located adjacent to Junction 36 of the M62, Croda will use the warehouse as its global distribution hub and will invest a significant amount in a state-of-the-art automated facility. The 33-acre site will have a very low site density of 16% and there is planning consent for approximately 140,000ft² of additional development.
Construction commences imminently and is expected to complete in mid-2020. LondonMetric will forward fund the developer db symmetry, benefiting from a 5.2% funding coupon.
Andrew Jones, Chief Executive of LondonMetric, commented: “In this ongoing low-interest-rate environment, we continue to be attracted to sustainable real estate which can deliver reliable, repetitive and growing income returns. This latest distribution investment is let to a high-quality occupier who is an existing customer of ours. It benefits from a very long lease at an attractive yield that is inflation-linked and will further improve the quality of our portfolio as well as offer further occupier-led development potential.”