Mayfair Capital’s Property Income Trust for Charities (PITCH) has acquired a high quality ’mid-box’ industrial estate in Stockport for c.€17m (£15.6m), reflecting 5.45% net initial yield. This acquisition further increases PITCH’s allocation to the logistics sector – currently the best performing segment in the real estate market – to over 42% following the acquisition of a logistics unit in Stoke-on-Trent last month. The building provides four modern, well-specified mid-box industrial units ranging from 29,000-49,000ft² which are in short supply in the Greater Manchester area. The four units are let to two tenants, Allied Publicity Services and Landis Gyr, providing a weighted unexpired lease term of 3.3 years to breaks.
In accordance with PITCH’s long-term commitment to provide sustainable, growing income for charities, the asset provides an attractive initial income return to PITCH of 5.73% per annum. The passing rent of €6.94 (£6.39) per ft² meanwhile stands at a significant discount to prime rents in the North West – currently at €8.42 (£7.75) per ft² – providing excellent rental growth prospects.
The South Manchester industrial market presents a compelling investment opportunity, as it benefits from good road links and serves a wide catchment including Manchester city centre, the affluent South Manchester area as well as Manchester Airport, which is situated five miles to the west. There is strong demand for good quality modern units under 50,000ft², which is expected to underpin rental growth over the next few years.
Phil Sturdy, Investment Director, said: “Investors are looking to deploy capital into defensive assets due to the continued strong fundamentals and the accelerated transition to eCommerce, as the structural shift away from ‘traditional’ retailing has sped up dramatically through the Covid Crisis and we expect a record take-up in the UK logistics sector this year.”
Simon Martindale, fund manager of the Property Income Trust for Charities, added: “As occupiers become more discerning, premium assets such as this, which are well specified and well connected, should continue to deliver long-term returns. Not only does this property provide attractive income with thematic characteristics, we aim to improve its sustainability credentials which should enhance the value of the asset.”
Nick Short, senior asset manager at Royal London Asset Management, said: “The strategic sale of Orion Business Park represents an excellent result for the fund with the terms agreed reflecting the continuing strength and resilience of the industrial sector.”
