LondonMetric Property has acquired a portfolio of UK-based logistics warehouses for £117 million ($150.5 million; €128.6 million).
The London-based property investor and developer bought the portfolio of 14 properties from Boston-based private equity real estate firm Cabot Properties.
LondonMetrics said that 11 of the 14 buildings are last mile logistics assets and more than half of these are located in the south-east of England and the Midlands.
The portfolio has a weighted average unexpired lease term of 5.6 years and generates annual rent of £7.2 million from its major tenants which include DHL, Howdens, Unipart and Royal Mail.
A recent report by London property services firm CBRE showed that increased investor demand for UK-based last mile logistics properties has boosted returns as yields compressed.
The CBRE UK Logistics Index recorded a 5 percent return for the year, an increase on the previous six months, which produced returns of 4.1 percent and 4.4 percent in H1 2016.
“The urban logistics market continues to benefit from a highly favorable demand/supply imbalance and this acquisition further increases our critical mass in this sub-sector to over £260 million across 38 assets,” said Andrew Jones, chief executive of LondonMetric.
“The acquired portfolio is fully income generating and offers good opportunities to extend lease lengths and capture strong income growth.”
Cabot sold the portfolio from its fourth industrial real estate vehicle, Cabot Industrial Value Fund IV. According to a document form one of its investors, Pennsylvania Public School Employer’s Retirement System, the fund has so far produced returns of 11.5 percent and an equity multiple of 1.1x. The firm’s previous vehicle, according to PSERS, generated returns of 21.9 percent and an equity multiple of 1.5x.
LondonMetric was advised by JLL, while Cabot was instructed by Accord Capital Partners.