Investor snaps up distribution centre for £20 million over asking price

Such is the demand for well let logistics properties that an investor is thought to have paid £20 million over the asking price for a warehouse let to Sainsbury’s in  the West Midlands.

Aviva Investors has snapped up the 783,000 sq ft Sainsbury’s distribution unit in Hams Hall, for £139 million. The investment was put on the market last year through Knight Frank on behalf of a group of Korean investors with an asking price of £119 million.

The distribution centre is let to Sainsbury’s on a 25-year lease with five-yearly rental reviews linked to increases in RPI. The property has a current passing rent of £5.7 million.

The Koreans purchased the Sainsbury’s Distribution centre for £98.5 million, reflecting a net initial yield of 4.9% in 2017.

The site has three structures; a main building which provides ambient and chilled storage facilities; a vehicle maintenance unit; and a resource recovery unit, which provides a waste return facility.

Kris McPhail, Director, Real Estate Long Income, at Aviva Investors, said: “We are pleased to add this distribution centre to our portfolio. Whilst long income assets have performed well over the past year in challenging market conditions, causing some crowding-in for smaller assets, we believe larger properties are better-positioned to deliver positive outcomes. With its strong location, this property is well-placed for national distribution whilst also being well-served by major international ports. The addition of a rail freight facility provides a cost-efficient means of transport which can transport heavier payloads faster whilst also reducing overall emissions. Coupled with a high-quality and creditworthy tenant, it continues our strategy of seeking prime assets that we believe provide offer best relative value and can provide our investors with attractive levels of long-term, inflation-linked returns.”

Aviva Investors was advised by Cushman and Wakefield.