LondonMetric Property has sold four multi-let industrial estates to Hines for £40.5m, in a deal reflecting a net initial yield of 6.2%. Hines acquired the portfolio on behalf of its Hines European Value Fund 2 (HEVF 2).
The estates provide 435,000 sq ft of space across 47 units and generate rental income of £2.7m per annum with a WAULT to first break of 2.9 years.
Three of the estates are located in close proximity to Birmingham city centre (Kingshill, Redwood Park and Shenstone), while the fourth – Triton Park – is located in Rugby.
LondonMetric acquired the estates as part of the Mucklow acquisition in June 2019. The REIT has now disposed of £194m of Mucklow’s former assets and generated a 26% uplift against allocated cost.
Andrew Jones, chief executive of LondonMetric, said: “These assets have delivered returns materially above our initial expectations from a combination of rental growth and yield compression. The sale is expected to be EPS accretive and represents our exit from highly operational multi-let industrial estates. Looking forward, we will continue to focus on aligning the portfolio to NNN lease assets that can deliver secure income and growth without incurring dilutive operational costs.”
Paul White, HEVF 2 fund manager, added: “We see the UK industrial and logistics marketplace as one of the best examples in Europe of the sector’s strong fundamentals, with significantly adjusted entry pricing. This latest transaction reflects our conviction in the vital importance of the small to mid-box industrial and logistics property market to the regional and national UK economy.
“We aim to continue acquiring attractively priced, income-producing industrial assets across the UK where we can add value over time through proactive asset management and accretive capital expenditure on ESG initiatives.”
LondonMetric was advised by ACRE.
