Real estate investor buys Kellogg’s warehouse for £23.5m

KELLOGG’S distribution facility at Trafford Park near Manchester has been acquired for £23.5m by listed company real estate investment trust Tritax Big Box.

The deal reflects a net initial yield of 5.9% with the purchase funded from equity proceeds with senior debt finance expected to be introduced in the near term.

The property is one of three distribution and production facilities located at Trafford Park let to Kellogg’s and is near production facility at Barton Dock Road which is the Kellogg Company’s largest manufacturing facility in Europe and where it manages its national and some international operations.

The asset was built to a high specification in 2007 and includes an eaves height of about15 metres, offices and extensive parking and loading facilities.

It  has also benefited from significant capital investment including recent investment to improve racking efficiency. The facility has a gross internal floor area of 311,602sq ft and a site cover of approximately 46%.

Trafford Park remains one of the largest and most successful business parks in Europe with one of the highest concentration of industrial and logistics facilities in the UK, principally due to its excellent rail, shipping and airport connectivity together with its proximity to the greater Manchester conurbation.

It has a dedicated rail freight terminal, which is the largest in the North West, running straight through to mainland Europe, direct access to the M60 and the Manchester Ship canal and Manchester International Airport.

The property is being acquired with an unexpired lease term of approximately 1.75 years with a passing rent of £4.50per sq ft and a capital value cost equivalent to approximately £75 per sq ft.

Colin Godfrey, partner of Tritax, said: “Kellogg’s is a world class company and we are delighted to add them to the very strong list of tenants in our portfolio.

“Trafford Park is a prime logistics location where we already own the L’Oréal distribution facility.

“The initial yield is accretive to our portfolio running yield and the short unexpired lease term presents an opportunity for value enhancement. This investment is highly reversionary, providing the potential for significant rental uplift upon re-letting or lease re-gear.”