Forward Funding Sees Major Development Move Forward
Wed 23 Sep 2015
A huge distribution centre being built by Caddick Developments for TK Maxx in Knottingley and set to support up to 2,700 jobs has been acquired in a deal worth £59m.
Tritax Big Box REIT has completed the land purchase and entered into contracts to provide forward funding for the development of the distribution facility, pre-let in its entirety to the retailer of branded apparel and home fashions in the UK and Ireland. The investment price of £59m reflects a yield of 5.32 per cent.
The site is strategically located at the junction of the M62 and A1 directly off the J33 roundabout, providing good access to Leeds, Manchester and the ports of Liverpool and Hull.
In addition, the new distribution facility is expected to benefit from the planned lane expansion on the M62 between West Yorkshire and Manchester and from the upgrading of long stretches of the A1 to motorway status by 2017. The region has attracted major occupiers, such as B&Q, Next, The Range and ASDA, which underpins the longevity of the area as a major UK distribution location.
The new distribution facility will comprise a gross internal floor area of approximately 635,000 sq ft, with an eaves height of approximately 17 metres, a low site cover of about 40 per cent and will accommodate the installation of three mezzanine floors that will create an additional circa 765,000 sq ft of useable space.
Upon practical completion, the property will be leased to TK Maxx on a new 20 year lease.
The development is being undertaken by Caddick Developments and guaranteed by Caddick Group.
Construction of the main works is expected to commence in September 2015 with practical completion of the construction targeted for January 2017. The land purchase is expected to be funded by Tritax from equity proceeds, with senior debt finance to be introduced in the near term.
Wimbush Real Estate represented Tritax.
Colin Godfrey, partner of Tritax, said: "This off market acquisition is a strong addition to our portfolio, further diversifying our tenant mix and increasing the weighted average unexpired lease term to approximately 16.7 years.
"The property occupies a key logistics location that is achieving strong rental growth. This purchase takes our total pre-let forward funded developments to six assets, including the recently completed initial construction phase of the development let to Rolls-Royce Motor Cars at Bognor, due to deliver, in aggregate, over three million sq ft. of new logistics buildings by the beginning of 2017."