SEGRO agrees new logistics partnership for Midlands sites
SEGRO and Roxhill Development Group have created a partnership which will provide the property company with access to a portfolio of big box logistics warehouse development sites in the South East and Midlands.
SEGRO said it knew logistics developer Roxhill well, having established a successful joint venture with it in 2013 at the Rugby Gateway site.
The new agreement, Roxhill Management Rugby Ltd, will act as development manager to the new partnership and will work exclusively with SEGRO once Roxhill has completed a number of existing development projects with other partners.
The sites subject to the transaction are at various stages of the planning process and the terms of the transaction allow SEGRO to phase its investment.
An initial investment, the majority of which is deferred, will be payable in consideration for a 50% share of Roxhill’s interests in options over the sites.
The deferred payment is due on each site as and when planning permission is granted, at which point SEGRO has the right to buy Roxhill’s remaining interests in the sites. Under the terms of the agreement, SEGRO will fund planning fees and development management costs.
After a period of 30 months from completion, SEGRO has the right to acquire all of Roxhill’s remaining option interests as well as the management platform, RMRL.
Should all of the sites become fully developed, the total potential capital expenditure (including land and infrastructure) is estimated to be around £800m over a 10 year period which will deliver over 10 million sq ft of big box logistics warehousing. The developments should generate an estimated blended yield on cost of approximately 7% at today’s rental levels.
SEGRO’s Chief Executive Officer, David Sleath, said: “Roxhill is a market-leading developer and a partner we know, trust and for whom we have a high regard. This partnership establishes a clear path for us to achieve the scale we desire in the attractive UK big box logistics market. We are convinced that this market has very favourable long term prospects given the lack of quality supply and increasing demand from retailers and logistics operators for modern space in the right locations.”
