Warehouse REIT, the AIM-listed company that invests in e-commerce urban and last-mile industrial warehouse assets in the UK, announces that it has exchanged contracts to acquire Bradwell Abbey Industrial Estate, for £62 million excluding acquisition costs. The purchase price reflects a net initial yield of c. 4% based on day one passing / guaranteed income and continues Warehouse REIT’s stated aim of acquiring assets in the Oxford-Cambridge Arc (the “Arc”).

The multi-let industrial estate totals 69 units across c. 335,000 sq ft, ranging from c. 1,000 to 15,000 sq ft in size. It is located just off the A5, providing fast access to the surrounding population of Milton Keynes and the wider motorway network, with the M1 being six miles to the East. The estate is currently 96% leased to a range of occupiers including Argos, F&F Stores and Taylor Kerr Engineering Ltd and produces a total annual income (including some rental guarantees) of over £2.6 million. The low average rent of c. £7.80 psf offers good reversionary potential, considering that prime rents in the area range from £10 to £14 psf. 

Milton Keynes is a highly sought-after industrial location, with vacancy sitting at c. 4%. Significant residential growth is putting further pressure on demand and underpinning land values, providing further rental growth potential.

Andrew Bird, Managing Director of the Investment Advisor, Tilstone Partners Limited, commented: “This acquisition, provides Warehouse REIT with clear opportunities to generate upside through strategic capital expenditure and working with the existing occupiers. We intend to refurbish units as they become available, improving the estate’s sustainability credentials, enabling us to capture new rental levels which will help drive future rents across the estate and strengthen the covenant profile.

“Located in one of Warehouse REIT’s favoured locations, the Oxford-Cambridge Arc’s industrial markets are characterised by an acute supply demand imbalance, driven by the growing dual demand from both industrial and science and technology occupiers. With supply failing to keep up with record levels of take up, land values have increased rapidly and strong rental growth is forecast.”

The transaction continues Warehouse REIT’s stated aim of increasing its holding in the Arc, with Milton Keynes central to this strategy, as a result of it being one of the premier distribution and industrial locations in the UK.  Following this acquisition, over 20% of Warehouse REIT’s portfolio is in the Arc, which will increase further upon completion of two ongoing development projects in the Oxford and Cambridge areas.

The Company is attracted to the highly favourable supply and demand dynamics of this globally significant area between Oxford and Cambridge, which is home to a booming and varied economy, with a key focus on the knowledge sector. Over the last 20 years, it has grown faster than any region outside London, and employment and wages are above the national average, with measured productivity within the Arc being 2.6% higher than the UK average. Milton Keynes is the fastest growing city in the country, recording GVA growth of 51% between 2009-18, with productivity almost 45% higher than the national average outside London.