Lothian Pension Fund has acquired the freehold of the Riverside Cargo Centre in Heathrow from Orchard Street Investment Management for £14.29m, in a deal reflecting a net initial yield of 5.49%.
The 2.3-acre site, on Mathisen Way in Poyle, comprises three units totalling 43,044 sq ft. The scheme is currently fully let to Amworld UK, Revisecatch and Kone with an unexpired lease term of 7.6 years. The property generates an annual passing rent of £836,665, reflecting a rent of £19/sq ft.
Nicola Barrett, from Lothian Pension Fund, said: “Poyle is a prime last mile industrial hotspot, however the location continues to suffer from a chronic under supply of new and well specified units; which will stoke further rental growth in the market. Given the property’s attractive ESG credentials, along with the opportunity to further enhance these attributes over time, this investment will ultimately provide attractive longer term returns for Lothian Pension Fund. We are keen to continue to acquire similar assets across the south east and south west regions.”
Charlie Foster, director, UK investment at Savills, which advised the pension fund on the acquisition, added: “The Riverside Cargo Centre provided Lothian Pension Fund with an excellent opportunity to acquire an industrial and logistics scheme in a key location with significant future asset management potential. Given the supply/demand imbalance in the wider market, we are likely to continue to see rental growth which should help to generate strong returns.”
Orchard Street Investment Management was advised by DTRE.
