Morgan Stanley Real Estate Fund is considering selling the UK´s second largest industrial landlord, Industrious, after receiving ´lots´ of unsolicited approaches. Any deal is set to be worth over £700m.
MSREF, which took Industrious private in a £500m buy-out in 2002, is currently two years into a five-year business plan for the Leamington Spa-based group. Roger Carey, Industrious Chairman and former Slough Estates Chief Executive, is believed to be happy with the progress, although the strength of the investment market has prompted a re-evaluation.
Industrious’s portfolio covers 14.5m sq ft of industrial property and is the second largest after that of Slough Estates. The properties are actively managed by Industrious Asset Management, which offers tenants innovative letting options, such as the Flexilet concept, a six-year lease, with a fixed 15% rental uplift after three years.
MSREF would sell Industrious as a business - thought to be worth a net £400m, taking into account £326.9m of bonds and other debt - rather than just its portfolio, which generates an annual rent roll of £49m and was valued at around £660m at the end of last year. It is expected that MSREF would not accept an offer unless a significant premium was paid, which would bring the price to over £700m.
Industrious is likely to attract a number of investors, such as Ashtenne and Property Fund Management, rival secondary industrial property investors. Slough Estates and Brixton might also be interested, though they tend to buy and develop properties in the south-east. Other investors that could be attracted to a potential sale include Warner Estate Holdings, Capital & Regional, Pillar Property and the Industrial Property Investment Fund.
Source: Freeman News/Property Week