Property fund Tritax Big Box REIT has acquired a Kellogg’s distribution facility at Trafford Park from Henderson for £23.5m, reflecting a net initial yield of 5.9%.
Developed in 2007 and known as Merlin 310, the building was owned by Aviva until the first half of 2013 when it sold the asset to Henderson. Henderson agreed the deal with Tritax, a highly acquisitive London-listed fund, off market.
Tritax said after completion, the “purchase is being funded from equity proceeds, with senior debt finance expected to be introduced in the near term.”
The property was acquired with an unexpired lease term of 1.75 years with a passing rent of £4.50/sq ft and a capital value cost equivalent to £75/sq ft.
Colin Godfrey, partner of Tritax, said: “Kellogg’s is a world class company and we are delighted to add them to the very strong list of tenants in our portfolio. Trafford Park is a prime logistics location where we already own the L’Oréal distribution facility. The initial yield is accretive to our portfolio running yield and the short unexpired lease term presents an opportunity for value enhancement. This investment is highly reversionary, providing the potential for significant rental uplift upon re-letting or lease re-gear.”
The property is one of three distribution and production facilities located at Trafford Park let to Kellogg’s and is close to its production facility at Barton Dock Road.