LondonMetric buys and funds new Croda distribution hub
LondonMetric Property has agreed to purchase and fund a new 232,000 square foot distribution warehouse for £24m, it announced on Monday, reflecting a yield on cost of 5.2%.
The FTSE 250 company said the warehouse had been pre-let to FTSE 100 speciality chemicals firm Croda, on a 20-year lease at a rent of £1.3m per annum, subject to annually-payable RPI-linked rental uplifts of between 1% and 3%.
It said the site, located adjacent to junction 36 of the M62, would be used by Croda as its global distribution hub, with the tenant set to invest a “significant amount” in an automated facility.
The 33 acre site would have a very low site density of 16%, with LondonMetric confirming there was planning consent for around 140,000 square feet of additional development.
Construction would begin “imminently”, the board said, with that expected to complete in mid-2020.
LondonMetric would forward-fund the developer, db symmetry, benefiting from a 5.2% funding coupon.
“In this ongoing low interest rate environment, we continue to be attracted to sustainable real estate which can deliver reliable, repetitive and growing income returns,” said LondonMetric chief executive officer Andrew Jones.
“This latest distribution investment is let to a high quality occupier who is an existing customer of ours.
“It benefits from a very long lease at an attractive yield that is inflation linked and will further improve the quality of our portfolio as well as offer further occupier-led development potential.”