Warehouse REIT has exchanged contracts on the acquisition of the Air Cargo Centre at Glasgow International Airport from Airport Industrial Nominees Limited. The purchase price of €12.7m (£11.1m) represents a net inial yield of 6.7% and a reversionary yield in excess of 7%. The property is held by way of a ground lease from Glasgow Airport, which expires in 2148. Located immediately adjacent to the Airport and only eight miles from Glasgow City Centre, the 150,000ft² estate is arranged across two detached warehouses purpose-built in 2000, housing eight units let to five separate occupiers, with a WAULT of 6.3 years (4.1 years to first break). It generates a total net passing rent of €899,340 (£788,086) per annum, equating to less than €6.28 (£5.50) psf average rent.
Current occupiers include Nippon Express, PJH Group and Alpha LSG, illustrating the breadth of the tenant base which includes companies servicing both direct airport activities as well as the wider logistics distribution market. Some of the units are let on rents as low as €5.77 (£5.06) psf, which provides significant near term opportunities to drive rental growth given the competition amongst occupiers for space and recent lettings in the immediate vicinity in the region of c.€8 (£7) psf.
Andrew Bird of Tilstone commented: "The Air Cargo Centre in Glasgow is an exciting acquisition, highlighting our focus on buying well-located warehouses close to important infrastructure hubs. There remains a constrained supply of airport-related warehouses and yet the purchase continues to represent an investment value less than the cost of replacement. It is the belief of Tilstone that assets such as the Air Cargo Centre represent scarce commodities where rental growth will outperform the wider market indices. It is interesting to note that 97% of Warehouse REIT's assets are less than two miles from a town centre or major transport infrastructure point, characterised as being the main road, railway station port or airport, with the average distance being less than 1 mile, proving both the urban and logistics nature of our assets."
