Key statistics as at 31 March 2019

Valuation:

£11.1 million                                             

Size:

149,500 sq ft

Contracted rent:

£788,000

Rent per sq ft:

£5.27

Occupancy:

91.6%

Key tenants:

Nippon Express (UK) Ltd, PJH Group Ltd, Alpha LSG Ltd

What is it?

We bought the Air Cargo Centre at Glasgow International Airport in January 2019 for £11.1 million. It comprises two purpose-built warehouses, containing eight units let to five occupiers, servicing airport activities and the wider logistics market. The WAULT was 6.3 years on acquisition, or 4.1 years to first break. Average rents are less than £5.50 per sq ft and as low as £5.06 per sq ft on some units.

Why did we buy it?

The price was attractive, with a NIY of 6.7% and a reversionary yield in excess of 7%. The modern units are in an excellent location for both national and international operators

What have we done since purchase?

Since acquisition, we have agreed a lease extension on 15,100 sq ft for a further five years at £5.75 per sq ft and agreed a short-term letting on one vacant unit at £8.00 per sq ft, taking the occupancy from 79.3% on acquisition to 91.6% at 31 March 2019. 

What is the future?

With recent nearby lettings in the region of £7.00 per sq ft, we have significant near-term opportunities to drive rental growth. There is also potential to buy the freehold, with the asset currently held through a ground lease expiring in 2148.

Comment 

“This was an exciting acquisition for Warehouse REIT, highlighting its focus on buying well-located warehouses close to important infrastructure hubs. Airport-related warehouses are in short supply and yet we were able to acquire it for the Group at less than the cost of replacement. Assets such as the Air Cargo Centre are scarce commodities and we believe the rental growth will outperform the wider market.”

Andrew Bird
Managing Director, Tilstone