LondonMetric buys airport asset, offloads handful of holdings
Delivery giant UPS’s East Midlands Airport hub has been acquired as part of a two-asset £51m deal, while five urban logistics sites have been sold for a combined £22m.
The incoming £51.1m portfolio consists of a logistics warehouse let to UPS at East Midlands airport and the Clayton hotel at Manchester airport, both let on very long leases with a WAULT to first break of more than 100 years.
They will generate £2.2m of rent per year, described by LondonMetric as “substantially below market rent of £8.2m per year”, with a running yield of 5% over the next few years:
Improved and expanded in 2021, the East Midlands Airport hub is a highly automated 450,000 sq ft airside logistics facility, let to UPS at £1.16m per year, or £2.60 per sq ft, with CPI-linked reviews.
The facility was developed by UPS at its own cost, and is the group’s second largest cargo facility in Europe, billed as the firm’s primary gateway in the UK.
In terms of assets leaving the LondonMetric stable, the £22.1m worth of disposals consists of five former Urban Logistics REIT assets sold at a blended net initial yield of 5.4%, and 5% above acquisition price.
This is made up of an urban warehouse in Redditch and a portfolio of four industrial open storage assets in Telford, Sheffield, Leigh and Northampton, let primarily to logistics firms XPO and DX.
Andrew Jones, chief executive of LondonMetric, said: “We have continued to monetise assets acquired through takeovers and have now sold eight Urban Logistics REIT assets at strong prices, reflecting the ongoing demand for smaller lot sizes.
“The proceeds from these and previous sales have been successfully reinvested into high quality, NNN and mission critical assets which are strongly underpinned by significant reversion and materially higher values achievable on vacant possession.
The East Midlands facility was described by UPS in 2021 as featuring automated scanning and sortation systems, capable of sorting 22,500 parcels an hour.
EMA is also served in part by liquefied natural gas UPS vehicles that connect the facility to customers throughout the UK, refuelling at a hub in Tamworth.
