London Metric acquires distribution warehouse in Bognor Regis

British property company LondonMetric purchased a south coast regional distribution warehouse for £17.8m on Thursday, reflecting a net initial yield of 9.0%.

The 298,600 square foot warehouse, located in Bognor Regis along the new bypass, was let for a further two years at a rent of £1.7m per annum to John Wiley & Sons but simultaneous with purchase, Wiley signed a 15-year reversionary lease with LondonMetric, commencing in 2021.

LondonMetric and Wiley's new lease will see the NYSE-listed research and education firm hand over £2.0m for rent every year, subject to annually payable RPI linked rental uplifts of between 1% and 3%. There were also break options for 2026 and 2031 included in the contract.

The FTSE 250 resident will fund improvement works to the building totalling £1.4m, which will deliver an initial yield on cost of 8.6%, rising to 9.6% in 2021 on commencement of the new lease.

Chief executive Andrew Jones said: "This acquisition offers a highly attractive yield and the opportunity to leverage our occupier relationship to deliver significantly greater certainty of income and income growth, as well as further improving the granularity of our income.

"It is a strong macro location with high intrinsic land values providing future optionality."

As of 0850 BST, LondonMetric shares were up 1.16% at 200.60p.