LONDON-Locally-based Segro, a REIT, and Moorfield Real Estate Fund II have partnered in an agreement to buy the 15-property UK Logistics Fund for $410 million. The sites are set to be transferred in January from Hermes Real Estate Investment Management Ltd., Legal & General and LaSalle Investment Management.
The portfolio is spread across 12 locations in the United Kingdom, with 64% of the 4.3-million-square-feet located in the south of England. The properties include Western Approach in Avonmouth, Bicester Distribution Park in Bicester, Birmingham Mail Centre in Birmingham, Bardon in Leicestershire, Dirft in Daventry, Hatfield Business Park in Hatfield, Rye Park Depot in Hoddesdon, Snodland in Maidstone, Keypoint Distribution Park in Swindon and Tunnel Avenue in West Thurrock.
The tenants at the properties include Tesco, Sainsbury’s, GKN Aerospace, Royal Mail, Booker and Exel UK. According to a Segro statement, the portfolio currently has a weighted average lease length of 13.3 years and an occupancy rate of 84%. Vacant are two warehouse units in Corby and Sheffield.
Segro and Moorfield have set the partnership up as the UK Logistics (Jersey) Ltd. Partnership, as a 50/50 venture, and both firms have contributed about $85 million. Both companies will handle strategic investment and asset management roles, and Segro will become the property manager of the portfolio. The joint venture also has taken a five-year bank loan of up to $247 million with Metropolitan Life Insurance Co. and DekaBank, secured by the portfolio. Laxfield Capital arranged the loan.
Officials with both firms said in the statement that this purchase will provide them with a better logistics presence in a core market. “The UK market is materially undersupplied with good quality distribution property, yet this is currently one of the few sectors showing growth and rising demand,” said Marc Gilbard, CEO of Moorfield.
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