LondonMetric sells €170 of UK mega box warehouses in strategic shift

LondonMetric Property has sold two mega box warehouses and two regional distribution warehouses, in three transactions in the UK, for a combined consideration of £145.3 mln (€170 mln).

The deal, which reflects a 2.6% discount to 30 September book value, is in line with the UK REIT's plans to reduce its mega box exposure. Following the sales, LondonMetric's big box warehousing will represent 14% of its portfolio, across three assets.

Andrew Jones, Chief Executive of LondonMetric, commented: 'We have taken the opportunity to respond to global investor demand for distribution warehousing to monetise some of our larger assets in geographies where we expect income growth to be more muted. The sales further improve the income diversification of our largest occupiers and provides headroom to invest further into urban logistics, which continues to offer superior income growth prospects.'
 
The four properties have a WAULT of 10 years and generate a rent of £8.3 mln per annum. The assets have delivered ungeared IRRs of between 8% to 10% since purchase.

In Newark, it has sold a 726,000 sq ft mega warehouse to an international investor for £80.8 mln, reflecting a NIY of 5.1%. The asset was acquired in 2014 for £68.5 mln and is let to Dixons Carphone for a further 14 years at a rent of £6.00 per sq ft.

In Doncaster, two distribution assets have been sold to an overseas buyer for £51.2 mln, reflecting a NIY of 6.2%. They comprise a 330,000 sq ft mega warehouse which was acquired in 2015 for £29.0 mln and is let to Next for a further four years; and a 176,000 sq ft regional warehouse which LondonMetric's DFS joint venture acquired in 2013 for £16.6 mln and is let to DFS for a further 10 years.

In Rotherham, a 152,000 sq ft regional distribution warehouse has been sold to a global investor for £13.3 mln at a NIY of 5.0%. The warehouse was acquired in 2014 for £10.3 mln and is let to the Royal Mail for a further eight years.

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