Tritax Big Box REIT has acquired two modern Big Box logistics facilities at Prologis Park, Stoke-on-Trent, Staffordshire, let to Marks and Spencer, and Dunelm. The combined net purchase price is €87.8m (£78.5m) and will be funded from equity.
Stoke-on-Trent has attracted major distribution occupiers including Asda, JCB, Michelin, New Look, Sainsbury's and TK Maxx. This core logistics location has excellent connectivity to the M6 motorway for access to Birmingham and Manchester city airports and the Port of Liverpool.
Marks and Spencer plc National Distribution Centre
The facility is one of M&S's five National Distribution Centres for general merchandise and onward fulfilment to Regional Distribution Centres. The property, which has benefited from significant capital investment from the occupier, has an eaves height of c.12 metres, a gross internal floor area of 382,594 ft² with a site cover of approximately 57%. The net purchase price reflected a net initial yield of 5.43% on the corporate acquisition.
The property has been acquired with an unexpired lease term of approximately 8.5 years and has a lease break or rent review in c.3.5 years. The lease is subject to five yearly upward only open market rent reviews. The passing rent reflects €5.86 (£5.24) per ft².
Dunelm (Soft Furnishings) Ltd National Distribution Facility
The facility comprises two interconnected buildings with a gross internal floor area totalling approximately 503,389 ft². The net purchase price reflected a net initial yield of 5.38% on the corporate acquisition.
These two sortation and distribution facilities, built to a high specification in 2004 and 2010 respectively, are interlinked and work in conjunction with the Company's new Dunelm National Distribution Centre located in nearby Sideway, Stoke-on-Trent, which was forward funded by the Company in June 2015, and together form Dunelm's dedicated national distribution hub. The properties have all benefited from significant capital investment by the occupier. Each building has an eaves height of c.12 metres, good parking and a site cover of approximately 56%.
The properties are being acquired with two coterminous leases, each with an unexpired lease term of approximately three years. There are no further rent reviews. The passing rent reflects c. €5.10 (£4.56) per ft² which is highly reversionary against current market rents in this location.
Colin Godfrey, Partner of Tritax, commented: "We are very pleased to have acquired these modern and adjacent Big Box distribution facilities, situated in an established core logistics location with two high-quality tenant covenants in M&S and Dunelm. They build on our strong working relationship with both retailers. These Value-Add investments provide an opportunity for rental growth and the short unexpired lease terms offer potential for capital value enhancement from either lease renewal or reletting. Value Add assets now constitute 17% of our portfolio by value."
