LXi REIT has acquired the freehold interest in Stobart’s industrial and office headquarters complex in Widnes for £25.5m in a sale and leaseback deal, reflecting a net initial yield of 5.5%.
The deal for the facility, currently under construction, was largely funded by the £19m sale of two care homes to Prime Life. LXi said it was acquired on an off-market basis, with a new, unbroken 22.5 year lease in place to the Cumbrian infrastructure and support services group.
The Widnes site extends to more than 40 acres and will comprise a new 23,000 sq ft headquarters office for the energy-focused part of the Stobart Group, an existing 180,000 sq ft warehouse used to store and process biomass timber waste and 20 acres of new hardstanding tyo store and process timber waste, along with HGV parking.
Stobart’s lease, which has no tenant break right, benefits from RPI-linked rent reviews collared and capped at 1.5% per year and 4% per annum compound on a five-yearly basis, but the first review takes place after 2.5 years.
The site, within the 3MG industrail masterplan area, is adjacent to the 28MW Widnes biomass plant, which is owned by Stobart and the UK Green Investment Bank and became operational last year. Stobart also benefits from a long-term contract to supply the plant with processed timber.
LXi REIT, in updating investors, said that the Mersey Gateway bridge and the success of Omega at Warrington were key factors in making Widnes a key growth area.
Simon Lee, partner of LXi REIT Advisors, said: “This disposal and acquisition reflect our strategy of selectively acquiring long, index-linked properties across sectors where we see value as well as profitably recycling our capital to deliver strong capital growth and secure inflation-linked income to our shareholders.”
Stobart Group is enjoying a healthy 2018. June saw both a deal announced with Ryanair for a base at its London Southend Airport, and the completion of building work on terminal building, apron and runway at Carlisle Lake District Airport, which is set to become operational in September.