LondonMetric Property (LMP) has announced that it has sold a portfolio of six distribution warehouses for £57.3m to Canmoor and AIMCo (a Canadian institutional investor) reflecting a blended net initial yield of 5.3%. LMP has built the portfolio over a number of years, which includes last year’s acquisition of A&J Mucklow. LMP says that the disposal will crystallise an £8.8m profit on cost and an ungeared internal rate or return (IRR) of 11% pre annum. Completion of the sale is delayed until 25 March 2021, allowing LondonMetric to receive approximately £1.5m of additional rent. LMP says that total receipts upon completion will be 3.8% above March 2020 book value.
About the warehouse portfolio
The warehouses are located in Worcester, Leamington Spa, Royston, Castle Donnington, Milton Keynes and Huyton. Most of the buildings were constructed in the 1990s and the portfolio enjoys a WAULT to break of 7.5 years. The properties are let to retailer Hamleys, CEVA, ITAB, Transmec and Groupo Antolin, an automotive supplier to JLR (Jaguar Land Rover).
Comments from Andrew Jones, Chief Executive of LondonMetric Property
“The attractive demand: supply dynamics in distribution and the increasing weakness in legacy sectors is attracting substantial capital into the logistics sector from both new and existing investors.
“Whilst we seek to avoid unnecessary asset turnover, we will always take advantage of strong approaches for our assets. These proceeds will be reinvested into other quality opportunities in the strongest geographies where rental growth over the long term will be superior.”
[QD comment: clearly demand for logistics assets such as these is strong, which is reflected in their pricing. While these would appear be assets for the future, and the sale is perhaps surprising, it does give LMP the opportunity to raise some cash and strengthen its balance sheet.]