Property company to build £15m distribution base for tyre manufacturer Michelin
A property group has exchanged contracts with tyre manufacturer Michelin to build it a new £15m distribution centre in Stoke-on-Trent.
LondonMetric Property will construct the 137,000 sq ft unit, which has been pre-let to Michelin for 15 years.
The new unit is expected to be completed in December.
Michelin has signed a 15-year lease at a rent of £5.35 psf, subject to five yearly reviews, at the higher of open market and guaranteed fixed uplifts. The anticipated yield on cost is 6.3% and construction is expected to begin shortly.
LondonMetric will also look to build out a further 130,000 sq ft unit upon completion of the Michelin facility.
Andrew Jones, chief executive of LondonMetric, said: “As we move onto our next development at Stoke we will look to leverage our occupier relationships to progress a full build out of the development.”
LondonMetric was advised by CBRE and Avison Young.
The property company intended to fund the development with a new placing of up to 62,804,390 shares – which represents approximately 9.9% of the company’s issued share capital.
The placing is expected to raise approximately £97m and the proceeds will enable the company to accelerate its portfolio alignment towards distribution.
The Stoke project is part of a £42m programme to fund distribution developments at three locations. The others being Dagenham and Crawley, together totalling 560,000 sq ft.
