Schroder ups logistics exposure with French deal

European property investor Schroder European Real Estate Investment Trust (SERE) has completed the acquisition of two logistics warehouses near Rennes, in Brittany, France, for €17.3 mln, reflecting a net initial yield of 5.9%.

The acquisition was part funded with a new loan facility totalling €8.6 mln, agreed with Franco-German regional bank SaarLB, which has been secured against the Rennes property. The loan has a term of 5.0 years and a margin of 1.4% above 3 month Euribor.

Jeff O’Dwyer, of Schroder Real Estate Investment Management, commented: 'The 12 year lease on this asset to a strong covenant in a fast growing region of France makes this another excellent addition to our already high-quality portfolio of assets.

'We have now deployed all of the proceeds from last year’s sale of low yielding retail assets into five warehouse investments, with a blended net income yield of approximately 6.4%, further diversifying the portfolio and increasing its allocation to the high growth industrial and logistics sector.'

Providing 23,852 m2 of institutional quality space across two adjacent buildings, the property is let on a 12 year lease to C-Log, the logistics subsidiary of Groupe Beaumanoir, the international fashion retailer, which has invested significant capex in equipping the building with automated technology, Schroder said.

Following this acquisition, the SERE portfolio comprises 13 properties with a value of approximately €240 mln and a blended net initial yield of 6.2%. The portfolio’s sector allocation is 46% office, 27% retail, 19% industrial and 8% mixed use, the firm said.

SERE now has total third party loans of €73.0 mln, representing an overall loan to value across the group of 29% against the gross asset value, at an average weighted interest rate of 1.4%. The average unexpired loan term is 5.5 years.


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