700,000 sq ft Tesco distribution centre sold for £46.2m

A 700,000 sq ft Tesco distribution unit in Staffordshire has been sold in one of the biggest deals this year.

EPIC UK has acquired the Tesco distribution hub at Fradley Park, on the A38 near Lichfield, for £46.2m, reflecting a net initial yield of 6.45 per cent.

Evans Property Group sold the unit, which is let to Tesco Stores on a lease with approximately 15.5 years remaining. The facility is used as one of Tesco’s main distribution centre, from which it services stores in the Midlands and the North.

Evans Property Group has been instrumental in developing more than two million square feet of distribution space at Fradley Park, which has attracted occupiers including DHL, Great Bear, Hellman Logistics, Amethyst Group and Palletways. 

Michael Elghanayan, principal at EPIC UK, said: “Fradley Park is one of the Midlands’ pre-eminent distribution parks with excellent communications. The property is both modern, let to an exceptional covenant and has a solid residual lease term. Furthermore, the capacity for Tesco to expand on site was very attractive to us.”

CBRE advised EPIC UK with Jones Lang LaSalle acting on behalf of the vendor.

Andrew Meikle, director of the capital markets team at CBRE in Birmingham, said: “The deal demonstrates that there is still strong investor appetite for prime industrial and logistics property in the Midlands.

“With prospects for rental growth looking subdued in many markets, the relative attraction of higher income yields on industrial and logistics property has increased.”