LondonMetric Property PLC (LON:LMP) has today announced that it has agreed to purchase and fund a new 232,000 sq ft distribution warehouse for £24.0 million, reflecting a yield on cost of 5.2%.
The warehouse has been pre-let to Croda, a FTSE 100 speciality chemical company, on a 20 year lease at a rent of £1.3 million pa subject to annually payable RPI linked rental uplifts of between 1% and 3% pa.
Located adjacent to Junction 36 of the M62, Croda will use the warehouse as its global distribution hub and will invest a significant amount in a state-of-the-art automated facility. The 33 acre site will have a very low site density of 16% and there is planning consent for approximately 140,000 sq ft of additional development.
Construction commences imminently and is expected to complete in mid-2020. LondonMetric will forward fund the developer, db symmetry, benefiting from a 5.2% funding coupon.
Andrew Jones, Chief Executive of LondonMetric Property PLC, commented:
“In this ongoing low interest rate environment, we continue to be attracted to sustainable real estate which can deliver reliable, repetitive and growing income returns.
“This latest distribution investment is let to a high quality occupier who is an existing customer of ours. It benefits from a very long lease at an attractive yield that is inflation linked and will further improve the quality of our portfolio as well as offer further occupier-led development potential.”