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Warehouse REIT buys Hansteen £116m UK warehouse portfolio

By Paul Norman - Monday, February 05, 2018 9:00

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Warehouse REIT, the AIM-listed specialist warehouse investor, has exchanged unconditional contracts to buy from Hansteen Holdings its Industrial Multi Property Trust portfolio, comprising 51 assets, the majority being multi-let UK urban warehouses, for £116m.

Warehouse REIT said the acquisition is "in line with [its] strategy and concludes the successful deployment of all funds raised by the company at IPO in September 2017, significantly ahead of plan, and brings the total property acquisitions to date to £279m".

The 51 warehouse properties provide over 500 leasable units delivering a total floor area of approximately 1.65m sq ft, the majority of which are located in the Midlands and South of England.

Approximately 93% of the floor area is invested in light industrial property with the 7% balance representing other workspace and offices. The current contracted rent roll is circa £8.5m pa (current passing £8.26m) from 382 distinct tenants. The portfolio is being acquired with an occupancy rate of 92% at an average contracted rent of £5.66 per sq ft and a WAULT of 3.9 years.

Warehouse REIT said the assets are located in established commercial locations, close to urban centres, major motorways or trunk roads.

It added that in aquiring a portfolio located predominately in the Midlands and South, the company’s overall portfolio is now more evenly spread across the UK with 29% in the Midlands, 29% in the South East, 27% in the North of England, 13% in Scotland and 2% in Wales.

The acquisition will be funded from existing cash resources and enlarged debt facilities of £135m (previously £65m), secured with HSBC.

HSBC has increased the company’s current revolving credit facility from £35m to £105m, for the same duration of five-years but at a reduced coupon of 2.25% above LIBOR (previously 2.40% above LIBOR). This enlarged facility is on the same terms as the existing £30m fixed term loan with HSBC.

Neil Kirton, non-executive chairman of Warehouse REIT, said: “This acquisition provides us with a meaningful portfolio of good-quality and well-located assets that are perfectly aligned with Warehouse REIT’s investment strategy. The portfolio is well known to management who have tracked it for some time and we are pleased to now be in a position to take ownership of it.

"The acquisition also allows the company to deliver on its business plan ahead of target, ensuring that for the year ending March 2019 the Company continues to expect to pay a dividend of 5.5p covered by earnings. The new assets weight the geographical spread of the overall portfolio towards the UK Midlands and South – areas that are expected to experience strong rental growth driven by high demand, while the near-term opportunity to grow the portfolio’s income presents a compelling proposition.

“In a competitive market environment, our ability, working with Savills, to secure this unique off-market investment opportunity is a clear illustration of the deal sourcing abilities of our experienced and well-connected management team and we are confident in realising the benefits of the acquired portfolio both in the short and longer term. With the IPO proceeds now fully deployed we will turn our focus to actively enhancing the value of assets under management, whilst continuing to review options to capitalise on our pipeline of further investment opportunities.”

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