Frasers Logistics & Commercial Trust (FLCT) has acquired a freehold logistics property at West Road, Hooton Park Airfield, Ellesmere Port in Cheshire, North West England in the UK from leading UK developer, Stoford Properties.
The property was acquired by FLCT Ellesmere Trustee 1 Limited and FLCT Ellesmere Trustee 2 Limited as joint trustees of FLCT Ellesmere Trust. FLCT Ellesmere Trust is a sub-trust that’s wholly owned by FLCT.
The property is yet to be developed. It will sit on a 14.41-hectare site and will have a total lettable area of 667,185 sq ft. The property will be developed by Stoford to high specification and sustainability standards and will be certified as net zero carbon in operation for the base build works. FLCT will fund the development by Stoford.
The all-in maximum consideration for the proposed acquisition on a completed basis is £101.0 million ($171.7 million).
Inclusive of fees, the total cost of the proposed acquisition is estimated to come in at £103.5 million ($175.9 million). The fees will be partially funded from the divestment proceeds of Cross Street. Cross Street was divested on Jan 24.
The consideration factored in the independent valuation conducted by CBRE Limited at £101.0 million as at June 1. The valuation is based on the income capitalisation approach and comparable market transactions.
The property is located on West Road within Hooton Business Park. The park sits within UK’s north west logistics and industrial market, which has witnessed strong occupier demand and falling vacancy rates.
According to CBRE, the area has continued its trend of strong take-up of 1.3 million sq ft in the 1Q2022, registering a growth of 14.0% y-o-y, with a record take-up of more than 5.0 million sq ft in 2021.
The development of the property is expected to be completed in the second half of 2023 and will be leased to Peugeot Motor Company Plc for a lease term of 15 years.
See also: Frasers Property: Narrowing the discount
The property will serve as Peugeot’s national distribution centre in the UK. The lease will also benefit from five-yearly, upward-only rent reviews.
The proposed acquisition marks FLCT’s second partnership with Stoford in the UK for the delivery of new state-of-the-art industrial facilities. Stoford has built over 17 million sq ft of industrial space since 1996 with an ongoing development capacity of 23,159,000 sq ft.
The proposed acquisition also marks FLCT’s sixth property in the UK, increasing the trust’s exposure to the UK market to 13.0% of its total portfolio value from 10.7% previously.
Post-acquisition, the weighting of FLCT’s portfolio by value towards the logistics and industrial market will also increase from 66.3% to 67.1%. Post-acquisition, FLCT’s weighted average lease expiry (WALE) will increase to 4.8 years from 4.6 years as at March 31. The trust will have a portfolio occupancy rate of 96.2%.
“The forward funding acquisition presents an excellent opportunity to add a state-of-the-art logistics facility to FLCT’s growing UK logistics and industrial portfolio,” says Robert Wallace, CEO of the manager.
“With a committed 15-year lease term to Peugeot, a subsidiary of the global automaker Stellantis Group, the Property will serve as its national distribution centre upon completion. The property will be developed to high building and sustainability specifications and will meet BREEAM “Excellent” and EPC A rating,” he adds.
Units in FLCT closed at $1.35 on June 24.
