Tritax Big Box REIT plc (LON:BBOX) announced that the Company has completed contracts for the forward funded development of a new logistics fulfilment centre at Integra 61, near Durham, pre-let to a financially robust world leading retailer. The price represents a maximum commitment of £147.3 million, reflecting a net initial yield of 5.25% (net of standard acquisition costs).
The development will comprise a new prime, state-of-the art, purpose-built facility, with a gross internal floor area of c.1,992,061 sq. ft. inclusive of three structural mezzanine floors and a low site cover of c.32%. This high specification facility will be cross-docked with an eaves height of over 20 metres. The property will also benefit from significant capital investment by the occupier, including high levels of automation.
The site has excellent road connectivity with direct access onto Junction 61 of the A1(M) and is also easily accessible by air or rail, being located close to Durham Tees Valley Airport, Newcastle International Airport and Durham railway station. The location is also near to the ports of Tees, Hartlepool, Sunderland and Tyne. The area benefits from an appropriately skilled and flexible labour supply within close proximity, which underpins the appeal of the area as an increasingly important UK distribution location.
Upon practical completion of the construction, targeted for summer 2020, the occupier will take up a new 20-year lease, subject to five yearly upward only rent reviews indexed to the Consumer Prices Index (collared at 1% pa and capped at 3% pa). During the construction phase, the Company will receive an income return equivalent to the annual rent from the developer.
This investment will be delivered in collaboration with the occupier and the Citrus Group, who will also be developing the remainder of the 200 acre Integra 61 project.
DTRE represented the Company, CBRE represented the occupier and Avison Young represented the Citrus Group.
Colin Godfrey, Partner of Tritax, commented:
“We worked very closely with our occupier customer to deliver this state-of-the-art, pre-let development, which provides the Company with further exposure to a market leading occupier. Strategically located in an increasingly important logistics location with a strong labour supply, this asset, once operational, will be the largest single let logistics facility outside the South East, as well as one of the most technologically advanced fulfilment centres in the UK, whilst providing further exposure to a high calibre tenant on a long lease.”