Warehouse REIT has exchanged unconditional contracts to acquire Hansteen Holdings Industrial Multi Property Trust portfolio, comprising 51 assets, the majority being multi-let UK urban warehouses, for €131.4m (£116m). The acquisition is in line with the Company’s strategy and concludes the successful deployment of all funds raised by the Company at IPO in September 2017, significantly ahead of plan, and brings the total property acquisitions to date to €316m (£279m).
The 51 warehouse properties provide over 500 leasable units delivering a total floor area of approximately 1.65 million ft², the majority of which are located in the Midlands and South of England. Approximately 93% of the floor area is invested in light industrial property with the 7% balance representing other workspace and offices. The current contracted rent roll is c.€9.6m (c.£8.5m) per annum (current passing £8.26m) from 382 distinct tenants. The portfolio is being acquired with an occupancy rate of 92% at an average contracted rent of €6.41 (£5.66) psf and a WAULT of 3.9 years.
Complementing Warehouse REIT’s strategic focus, the assets are located in established commercial locations, close to urban centres, major motorways or trunk roads. Furthermore, in acquiring a portfolio located predominately in the Midlands and South, the Company’s overall portfolio is now more evenly spread across the UK with 29% in the Midlands, 29% in the South East, 27% in the North of England, 13% in Scotland and 2% in Wales.
The acquisition will be funded from existing cash resources and enlarged debt facilities of €152.9m (£135m), secured with HSBC. HSBC has increased the Company’s current revolving credit facility from €39.6 m (£35m) to €118.9m (£105m), for the same duration of five-years but at a reduced coupon of 2.25% above LIBOR (previously 2.40% above LIBOR). This enlarged facility is on the same terms as the existing €34m (£30m) fixed term loan with HSBC.
Commenting on the transaction, Neil Kirton, Non-Executive Chairman of Warehouse REIT, said: “This acquisition provides us with a meaningful portfolio of good-quality and well-located assets that are perfectly aligned with Warehouse REIT’s investment strategy. The portfolio is well known to management who have tracked it for some time and we are pleased to now be in a position to take ownership of it. The acquisition also allows the Company to deliver on its business plan ahead of target, ensuring that for the year ending March 2019 the Company continues to expect to pay a dividend of 5.5p covered by earnings. The new assets weight the geographical spread of the overall portfolio towards the UK Midlands and South – areas that are expected to experience strong rental growth driven by high demand, while the near-term opportunity to grow the portfolio’s income presents a compelling proposition. In a competitive market environment, our ability, working with Savills, to secure this unique off-market investment opportunity is a clear illustration of the deal sourcing abilities of our experienced and well-connected management team and we are confident in realising the benefits of the acquired portfolio both in the short and longer term. With the IPO proceeds now fully deployed we will turn our focus to actively enhancing the value of assets under management, whilst continuing to review options to capitalise on our pipeline of further investment opportunities.”