LondonMetric Property has snapped up a million sq ft pre-let distribution complex in Northamptonshire following its recent £60m acquisition of a nearby site which already houses budget retailer Primark’s central distribution hub.
In the first deal — signed last Friday [28 March] — LondonMetric bought a warehouse at Thrapston from Moorfield Real Estate Fund II. Commenting on the deal Moorfield’s chief executive, Marc Gilbard, said: “Having purchased the distribution centre in 2011 we worked with Primark to build a 140,000 sq ft extension and undertake works to the roof of the building, following which we were able to agree new lease terms.” The approach by LondonMetric was, he added, unexpected and too good to refuse.
Primark has exclusive use of the 785,000 sq ft property. It is currently paying £3.9m a year for the recently renegotiated lease which is due to expire in 2032. Other companies operating distribution hubs on the same site include Paperchase, Morrisons and DSV Logistics.
Andrew Jones is chief executive at LondonMetric Property, the real estate investment trust created by the merger of London & Stamford Property and Metric Property Investments. “Primark is one of the UK’s most successful retailers and this investment offers excellent cash returns and exposure to prime real estate, which is let for nearly 20 years to a fantastic covenant, with guaranteed annual rental increases,” he explained.
Jones said his company regarded distribution sites as a key growth area within its core portfolio and aim to capitalise on this dynamic sector. Just three days later LondonMetric backed up that strategy by announcing it had exchanged contracts to develop a 1.06m square feet retail distribution centre on the A14 in Islip — across the River Nene and almost within sight of its new Primark holding.
Work on the 70-acre site, which it bought from Greatline Developments, is expected to start this summer with a 12 month deadline. The site already has outline planning consent and while declining to say how much it paid for the site, London Metric says the total coast of the project is expected to top £77m.
“This is one of the UK’s largest ever pre-let developments and an integral part of our strategy to deliver well-let short cycle developments in partnership with our key operators,” said Jones. The entire Islip development will be let to “a top 25 retailer” on a new 25 year lease. The initial rent is expected to be £5 per square foot.
“The distribution market is evolving very quickly with take-up forecast at 50m sq ft over the next five years,” added Jones. “We are a partner of choice to many of the UK’s leading operators and look forward to delivering this latest generation distribution centre which will materially enhance our existing portfolio and significantly grow our contracted rental income.”
LondonMetric came to prominence when it acquired a significant stake in Sheffield’s Meadowhall Shopping Centre from British Land in February, 2009. Valued at just under £1bn its property portfolio includes retail, office and warehousing sites across Britain, most notably its 100 per cent stake London’s One Fleet Place.
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