Tritax Big Box REIT plc (LON:BBOX) has announced that it has acquired a prime temperature controlled distribution unit in the core South Coast location within the Nursling Industrial Estate in Southampton, for £44.2 million, reflecting a net initial yield of 5.24%, in an off market transaction with a UK real estate fund.
An attractive asset in a prime location
The acquisition secures an attractive asset in a prime logistics location, providing critical cold-store capabilities close to a key UK port.
· 325,000 sq ft building with extensive cold-store capabilities on a 20 acre site
· Well configured cross-docked building with 10 metre eaves and 53 dock levellers, together with extensive parking and yard area
· Nursling Industrial Estate is the pre-eminent location for logistics on the South Coast, where Southampton represents the primary logistics hub for the region
o Excellent road, port and rail connectivity
o Proximity to a major population centre providing a deep employment market for occupiers
· Very low vacancy rates in the Southampton area due to high demand from a range of occupiers
Opportunities to increase value and income
The building is let to Tesco on a 25 year lease expiring in January 2021 and, through extensive due diligence, we believe the site provides a range of opportunities to deliver near-term value through asset management, including:
· Increasing value through agreeing a lease regear/new lease
· Growing income through capturing current market rental reversion
· Capturing future rental growth in a structurally undersupplied location
· Enhancing the configuration of the built area and yard
· Increasing the asset’s sustainability through green initiatives such as solar
Financed through a blend of existing resources and issuance of new shares
The £44.2 million consideration will be financed through £24.2 million of existing resources and the issue to the seller of 12,166,930 new Ordinary Shares in the Company at a price of 164.38 pence per share.
· This issue price represents a 6.2% premium to the 30 June 2020 EPRA NAV
· The new Ordinary Shares are subject to a six-month orderly market agreement in customary form
Colin Godfrey, Tritax Big Box CEO, Fund Management, commented:
“This is a rare asset acquired off-market in a prime South Coast location next to the M27 motorway and close to the Port of Southampton. Benefitting from a strong existing tenant and a robust underlying occupational market, this building presents us with several attractive asset management opportunities which we expect will drive income and capital value growth. While the investment market for logistics assets continues to strengthen, there remain select attractive acquisition opportunities where significant value can be added through asset management.”
Listing of new shares
The new Ordinary Shares to be issued by the Company as part of the consideration represent approximately 0.71% of the Company’s existing issued share capital. Applications have been made for all of the new Ordinary Shares to be admitted to the Premium Listing segment of the Official List of the UK Financial Conduct Authority (the “FCA”) and to trading on the London Stock Exchange’s Main Market for listed securities (“Admission”). The new Ordinary Shares will rank pari passu with the Company’s existing Ordinary Shares, and Admission is expected to occur at 8.00am on 16 November 2020.
Total voting rights
Immediately following Admission, the Company will have 1,719,141,878 Ordinary Shares of 1 pence each in issue and therefore the total voting rights in the Company will be 1,719,141,878. This figure may be used by Shareholders as the denominator for the calculations by which they may determine whether or not they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules. The Company does not hold any shares in Treasury.