BMO Real Estate Partners, the pan-European property investment and asset management arm of BMO Global Asset Management, has concluded the off-market acquisition of two freehold assets for a combined price of £19.4m, with an accretive combined yield, on behalf of BMO Real Estate Investments Limited (BREI).

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The acquisitions represent the successful delivery of the key near-term objective to recycle proceeds realised from a number of strategic disposals from the High Street and Office sectors into the Retail Warehousing and Industrial sectors, targeted for their robust occupational demand, income resilience and favourable performance prospects.

The first property, an industrial asset in Colnbrook, Heathrow, was acquired for £12.1 million and is highly reversionary with a net initial yield of 4.0 per cent. The asset is fully let to a vehicle servicing centre for a further three years in a market that is characterised by very tight supply dynamics, offering opportunity for value creation through near term asset management.

The second property comprises a retail warehousing scheme in Banbury, Oxfordshire, occupied by home-improvement tenants Wickes and Topps Tiles for a further four years. The property was acquired for £7.3 million, reflecting a net initial yield of 6.3 per cent. The acquisition enhances the Company’s exposure to the functional, low rented part of the retail warehousing sub-sector, which continues to see material yield compression based on robust occupational fundamentals coupled with the potential for alternative uses, protecting long-term value.

Peter Lowe, Fund Manager at BMO Real Estate Partners, said: “These latest acquisitions successfully conclude the near-term objective of redeploying cash reserves into our target sectors, having sought assets that offer ongoing asset management opportunities coupled with attractive long-term performance prospects, driven primarily by income. The two new properties complement our existing exposure to these resilient sectors and provide opportunities for further value creation, capitalising on the strong occupational dynamics within the Industrial and Retail Warehousing markets.”

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