(Alliance News) - Urban Logistics REIT PLC on Thursday said it has bought five assets for GBP90 million, which it expects will have "significant potential for further value".
The UK logistics real estate investor said the largest acquisition in price was a warehouse in Southall, West London. The property's purchase price was GBP46.0 million, at a net initial yield of 1.9%.
Urban Logistics expects this 97,362 square foot property to be "highly reversionary", with the current tenant paying GBP10 per square foot and rent in the area being around GBP25 per square foot. It added that it plans to quickly let out the asset by securing a new long-term lease, providing a yield of 4.2%.
The company has also bought a 249,211 square foot logistics warehouse in Bardon for GBP35.4 million. The property has a NIY of 4.7% and is currently let out to DHL Supply Chain Ltd on a lease expiring in 2027.
It bought an additional logistics warehouse in Dundee, Scotland for GBP2.8 million at a NIY of 6.5%. The 29,834 square foot asset is let to DPD Group on a lease expiring in 2027.
Urban Logistics also said it has bought a 31,105 square foot newly refurbished industrial warehouse located in Sheffield. The purchase price paid was GBP3.1 million. It has a target NIY of 6.1% and is currently vacant.
Finally, the smallest property, in both size and price, is an industrial warehouse in Barnsley. The 24,230 square foot property was bought for GBP2.6 million. It is currently let to a vintage clothing operator, which processes and sorts textile recycling on site, with the lease expiring in 2029, Urban Logistics said.
The company added that the "low" rent of GBP6.00 per square foot is subject to an open market review in 2024. Rent in the area is around GBP7.50.
Chief Executive Officer Richard Moffitt said: "During recent market volatility we have been deliberately patient in our deployment, and that patience has been rewarded by our ability to acquire these properties in prime locations on advantageous terms.
"Our occupational market, with its focus on supply chains for essential goods, remains strong with continued upward pressure on rents. We firmly believe that, at any stage in the property cycle, if we improve lease lengths we will see yield compression."
Shares in Urban Logistics were up 0.1% to 171.73 pence each in London on Thursday morning.
By Sophie Rose; sophierose@alliancenews.com
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Urban Logistics (SHED)