Regeneration specialist snaps up logistics site in £5m deal
Brownfield property developer and investor, Harworth Group has acquired part of a Worcestershire industrial estate in a deal worth more than £5m.
The group, which owns and manages a portfolio comprising 21,000 acres of land across 140 sites in the Midlands and North of England, has completed the purchase of the 8.7-acre site at Berry Hill Industrial Estate in Droitwich from DHL, for £5.2m plus costs.
Three miles from Junction 5 of the M5, the site currently comprises a 112,416 sq ft commercial unit that has immediately been leased back to DHL.
The five-year term at a passing rent of £450,000 per annum represents a net initial yield of 8.15% and a reversionary yield of 8.65%.
The deal supports the group’s strategy of increasing and improving the quality of its recurring income base, while in the longer-term, the site’s very low density of 30% provides the opportunity for a whole or partial site redevelopment.
The acquisition, alongside that of a 131-acre site in Doncaster, follow three strategic land purchases completed in August 2017 across the Midlands and North West – Chatterley Valley in Stoke-on-Trent, Coalville in Leicestershire and Wingates in Bolton.
These five transactions plus acquisition costs and initial planning and infrastructure costs account for £27.1m of new equity raised by the group in March 2017.
Owen Michaelson, CEO, Harworth, said: “This is a major milestone for the business which sees the culmination of the successful deployment of all new equity raised in March through the acquisition of two well-located sites that are projected to deliver double-digit returns.
“Expanding our strategic land bank is a core part of our business strategy of delivering continued value to our shareholders and both purchases provide clear long-term value-add opportunities. In addition, securing a strong covenant at Droitwich adds to our medium-term income stream, as we look to improve the defensive qualities of the portfolio.”
He added that the outlook for the group’s principal markets in the North of England and Midlands remained strong, largely due to the scarcity of good quality new commercial space.
