Tritax Big Box acquires huge wine bottling facility in Avonmouth

Tritax Big Box has acquired an 872,000 square foot distribution unit in Avonmouth for £90m, it announced on Wednesday, reflecting a net initial yield of 5.1% for 13 years of income.

The FTSE 250 real estate investment trust described the acquisition as a “large scale and attractively priced, state-of-the-art” asset in a strengthening logistics location.

It secured the property through an off-market acquisition, adding that it would expand its exposure to the “increasingly important” South West of England.

Avonmouth was described by the board as the principal logistics and manufacturing area for the region, centred around the Port of Bristol, adding that following approval for a deep-sea container terminal at Avonmouth, the capacity of the docks was expected to double over the next decade.

The area had low vacancy rates due to rising occupier demand driven by transport links with the M5, M4 and M49 motorways, enabling access to more than 85% of the UK's population within 4.5 hours, and further supported by “strong and rising” demand from the port.

Demand had continued to outpace supply in the region, Tritax noted, encouraging and sustaining rental growth.

The building was let to Accolade Wines as a key component of its supply chain, used for receiving and bottling wine for sale into key UK and European markets.

Constructed in 2008, with a ground floor area of 872,000 square feet, the building has internal eaves heights of between 15 and 18 metres, 30 dock level loading doors and high-quality office accommodation.

Tritax said the customer had installed bottling and box bag packaging lines and tanks, with the capacity to produce 1,200 bottles of wine per minute from the facility.

The building is the largest wine production, warehouse and distribution centre in Europe, distributing to all major UK supermarkets and into European markets, and providing about 20% of the UK's wine supply.

Tritax said the asset offered 12.8 years of unexpired lease term in an attractive reversionary position, with five-yearly rent reviews providing a minimum of CPI uplifts, opportunities to add further value through a potential lease extension, and environmental, social and governance (ESG)-related asset management initiatives aligned to the customer's commitment to net zero carbon.

“In line with our strategy, we continue to monitor the market closely for attractive acquisition opportunities,” said Colin Godfrey, chief executive officer of fund management at Tritax.

“This is a key asset, let to one of the world's largest wine companies by volume, in a strong and increasingly important location for logistics in the UK.

"This state-of-the-art asset, acquired off-market, provides a valuable and long-term income stream.”

Godfrey said the tenant had committed “heavily” to the facility, noting that it is the largest wine warehouse and distribution centre in Europe.

“Thanks to a combination of buying well, strong market fundamentals and opportunities for value enhancing asset management initiatives, we believe this building will deliver a very attractive return to our shareholders.”

At 0824 BST, shares in Tritax Big Box REIT were up 0.05% at 190.9p.