UKREiiF attendee BMO Commercial Property Trust Ltd (“BCPT”), which is managed by BMO Real Estate Partners (BMO REP), the pan-European property investment and asset management specialist arm of BMO Global Asset Management (EMEA), announces that it has increased the portfolio’s industrial weighting to 29.3% following the acquisition of two high-quality logistics assets in the UK midlands. The Fund has further strengthened its exposure to the sector with the commitment to two logistics developments, originating from its existing portfolio, with this combined investment activity totalling £76.5 million.
The first acquisition comprises Orion One and Two of Derbyshire’s 200-acre flagship redevelopment scheme, Markham Vale, which was purchased for £44.5 million, reflecting a net initial yield of 3.7% and a low capital value of £148 per sq ft. The asset, which was completed to the highest standards in April 2021, benefits from a strategic logistics location adjoining junction 29A of the M1 Motorway. The two purpose-built units comprise 224,424 sq ft and 75,958 sq ft respectively and are each fully let to strong covenants on newly agreed 10 year leases generating a combined rent of £1,764,000 per annum.
BCPT has also acquired Unit 4 of Quintus Business Park in Burton-Upon-Trent by way of forward funding the development of a new 171,550 sq ft logistics warehouse for a total consideration of £21.5 million, reflecting a yield of 4.84%. Construction of the high specification property, which is targeting a BREEAM Excellent rating, is underway, with completion expected in July 2022. A pre-let has already been agreed on a 15-year lease term [(tenant break after 10 years)] at a rent of £1,072,000 per annum.
Further to these acquisitions, and in response to supportive market conditions, BCPT has committed £10.5 million to the speculative development of two logistics schemes from within its portfolio, comprising a 52,000 sq ft mid-box logistics unit at Estuary Business Park, Liverpool, and a c.35,000 sq ft new multi-unit trade counter at the Cowdray Centre in Colchester.
This activity represents the first phase of re-investment of the £199.5 million gross proceeds generated from the disposal of Cassini House, London and two retail warehouse assets in East Kilbride and Rochdale, during 2021. The recycling of capital aligns with the Company’s goal of rebalancing its portfolio whilst increasing weighting towards the strongly performing industrial and logistics sectors. Furthermore, the newly developed assets support the portfolio’s sustainability objectives on account of the properties’ superior ESG credentials.
Richard Kirby, Lead Manager of BCPT commented: “These latest investments accord with our stated goal of recycling capital to increase BCPT’s exposure to prime, modern industrial and logistics assets in established locations. This activity simultaneously has the added benefit of increasing the Fund’s tenant roster with leases linked to RPI and exposure to assets achieving strong underlying ESG performance. Our commitment to the developments at Colchester and Liverpool, coupled with encouraging early tenant interest, is demonstrative of the value embedded within the existing portfolio.”
BMO REP was advised on these transactions by Knight Frank (Markham Vale) and CBRE (Burton-Upon-Trent).
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