AEW UK REIT, which owns a diversified portfolio of 31 regional UK commercial property assets, announces the acquisition of industrial assets in Basildon, Essex and Runcorn, Cheshire, for a total of ca. €3.1 (£2.6m).
Basildon comprises a 33,000 ft² single-let industrial building located on the established Pipps Hill Industrial Estate, just off the A127, approximately five miles from Junction 29 of the M25. The purchase price of €2.4m (£2.0m) reflects an attractive net initial yield of 9.3%, a reversionary yield of 8.8% and a low capital value of c. €76 (£64) per ft². The building will be let on a new 10 year lease to Merson Signs Ltd, at a passing rent of ca. €7 (£6) per ft².
The Runcorn asset, which shows an initial yield of 7.8%, completes the Company's acquisition of the whole of the Sarus Court industrial estate, where the Company already owned five of the six units. The estate provides well specified, modern industrial units of between 11,000 and 17,000 ft², which are let to a number of light-industrial occupiers on a WAULT of over 4 years. The newly acquired unit, which is let to Dimension Data until 2020, offers significant reversionary potential, with a passing rent of ca. €5.33m (£4.50) per ft² which is more than 15% lower than a recent Sarus Court letting secured by AEW UK at ca. €6.22 (£5.25) per ft².
Sarus Court forms part of the wider Manor Park industrial estate, strategically located to the west of Runcorn and five kilometers from the Mersey Gateway Project, a new six lane bridge over the River Mersey connecting the towns of Runcorn and Widnes and linking the M56 to M62. The project is due for completion in autumn 2017.
In order to complete the transactions, the Company utilised funds gained from the sale of its asset on the Equinox Business Park in Salisbury, which completed in February, together with an additional €1.8m (£1.5m) which has been drawn down from its existing loan arrangement with lender RBSi which has seen the Company's gearing position increase from a loan to value ratio of 18.7%, to 19.8%.
