Tritax Big Box acquires M&S, Dunelm facilities in Staffordshire

Tritax Big Box has completed contracts with ProLogis European Finance XI Sarl to acquire two modern big box logistics facilities at Prologis Park, Stoke-on-Trent, Staffordshire, let to Marks and Spencer and Dunelm, it announced on Wednesday morning.

The FTSE 250 real estate investment trust said the combined net purchase price was £78.5m, and would be funded from equity.

It said Stoke-on-Trent has attracted “major” distribution occupiers including Asda, JCB, Michelin, New Look, Sainsbury's and TK Maxx.

“This core logistics location has excellent connectivity to the M6 motorway for access to Birmingham and Manchester city airports and the Port of Liverpool,” the board said in its statement.

It said the Marks and Spencer national distribution centre was built to a “high specification” in 2008, with the net purchase price reflecting a net initial yield of 5.43% on the corporate acquisition.

The facility was one of M&S's five national distribution centres for general merchandise and onward fulfilment to regional distribution centres, Tritax said.

“The property, which has benefited from significant capital investment from the occupier, has an eaves height of 12 metres, a gross internal floor area of 382,594 square feet with a site cover of approximately 57%.”

Tritax said the property was acquired with an unexpired lease term of approximately 8.5 years and had a lease break or rent review in around 3.5 years.

The lease was subject to five-yearly upward only open market rent reviews, with the passing rent reflecting £5.24 per square foot.

Tritax described the Dunelm national distribution facility as a “modern and versatile” facility comprising two interconnected buildings, with a gross internal floor area totalling 503,389 square feet.

The net purchase price reflected a net initial yield of 5.38% on the corporate acquisition.

“These two sortation and distribution facilities, built to a high specification in 2004 and 2010 respectively, are interlinked and work in conjunction with the company's new Dunelm national distribution centre located in nearby Sideway, Stoke-on-Trent, which was forward funded by the company in June 2015, and together form Dunelm's dedicated national distribution hub,” the board explained.

It said the properties had all benefited from “significant” capital investment by the occupier.

Each building has an eaves height of.12 metres, “good” parking and a site cover of approximately 56%.

The properties were being acquired with two coterminous leases, each with an unexpired lease term of approximately three years.

There were no further rent reviews, and the passing rent reflected around £4.56 per square foot, which Tritax said was “highly reversionary” against current market rents in the location.

“We are very pleased to have acquired these modern and adjacent big box distribution facilities, situated in an established core logistics location with two high quality tenant covenants in M&S and Dunelm,” said Tritax partner Colin Godfrey.

“They build on our strong working relationship with both retailers.

“These value add investments provide opportunity for rental growth and the short unexpired lease terms offer potential for capital value enhancement from either lease renewal or reletting. value add assets now constitute 17% of our portfolio by value.”