Investment trust agrees £53m deal for new distribution hub
SPECIALIST property investor Tritax Big Box REIT has continued its expansion in the West Midlands with the announcement of a new £53m deal to develop a new distribution hub for tools retailer Screwfix Direct.
The investment trust has completed the land purchase and exchanged contracts to provide forward funding for the development of the new distribution facility at Prologis Park Fradley.
The development represents an investment of £52.7m, reflecting a net initial yield of 5.5%.
The 562,000 sq ft warehouse, which will have an eaves height of 15 metres, will feature extensive parking, offices and a site cover of approximately 48%. The development will be Screwfix’s fourth UK distribution centre.
Following completion, targeted for October 2017, the property will be leased to Screwfix on a new 10-year lease, subject to five yearly upward only open market rent reviews. During the construction phase, the company will receive an income return equivalent to the agreed rent from the developer.
The development is being undertaken by Winvic Construction and guaranteed by Prologis UK on behalf of Tango Real Estate, a joint venture vehicle between Prologis and Wittington Investments (Developments).
The land purchase has been funded by Tritax from equity proceeds, with senior debt finance to be introduced in the near term.
DTRE represented the company and JLL represented the vendor.
Colin Godfrey, partner of Tritax, said: “This investment which is accretive to our dividend is a good addition to our portfolio, offering tenant and business sector diversification with a strong covenant.
“The property is located within the Golden Triangle for UK logistics, which is seeing positive rental growth. This represents our eighth pre-let forward funded development and brings our total portfolio to 35 assets.”
The site is situated close to the A38 dual carriageway, M6 Toll, M42 and M1 motorways as with close proximity to rail and air connections. The area has attracted a significant number of major occupiers including Bidvest Foodservice, DHL, Tesco, Wincanton and Yodel.
