SEGRO gets Midlands big box warehouse in ninth asset swap

SEGRO has acquired a fully let 390,000 square foot big box warehouse in the Midlands region from Legal & General’s LGIM Real Assets, it announced on Wednesday, in exchange for Kingsland Business Park, which is a multi-let industrial estate in Basingstoke, and a balancing cash payment.

The FTSE 100 firm said the warehouse is located in Crick, which it described as a “prime location” close to junction 18 of the M1 motorway.

It is currently let to pet food producer Butcher's Pet Care, and is the company's only facility in the UK having been located in the area since 1976.

The warehouse, which was constructed in two stages between 2010 and 2016, is leased for a further 19 years without break.

SEGRO said the acquisition price of £41.3m reflected a net initial yield of 5.0%, and offered reversionary potential compared to current rental levels for modern warehousing in the area.

It said Kingsland Business Park comprises 50 buildings totalling 676,300 square feet, located two miles from Basingstoke town centre and three miles from the M3 motorway.

The estate has an average lease length of approximately three years and a vacancy rate of less than 5%.

SEGRO said the disposal price of £70.0m reflected a net initial yield of 5.9%, and was ahead of book value as at 30 June.

“This is SEGRO's ninth asset swap, enabling us to focus our portfolio on our core areas and asset types, in particular on big box warehouses in the Midlands and urban warehouses in London and the Thames Valley, whilst mitigating the impact of a disposal on income,” said SEGRO’s chief investment officer Phil Redding.