Segro confirms sale of Great Western Industrial Park for £110.4m

08:44 | 06.11.09

As tipped by Property Week the deal represents a net initial yield of 6.9%, which rises to over 7% once outstanding reviews are settled.

The park comprises 773,379 sq ft and includes 27 production and warehouse units. Its tenants include food and beverage companies Noon Products and Delifrance. The weighted average lease length for the sale of the estate is 10.2 years to earliest termination.

As part of the sale, Segro has pre-sold a future development of 36,575 sq ft at Western Point which forms part of the industrial park. The REIT has entered into an agreement with GeoPost UK to develop a cross docking warehouse on a 20 year lease at an annual rent of £621,775.

Segro said the sale price of Great Western Industrial Park represents a 10% premium over the book value at June 2009 after allowing for the capital expenditure to be incurred in connection with the GeoPost pre-let, and also a 34% increase over the implied valuation at the time of the offer to acquire Brixton.

Ian Coull, Segro’s chief executive said, "When we bought the Brixton portfolio, we knew there would be opportunities for us to pursue our strategy of pro-actively recycling assets. This sale confirms the attractive price at which we acquired the whole of the Brixton portfolio.

"The Brixton portfolio has been successfully integrated within SEGRO’s UK business and despite the challenging markets we are currently facing we believe that a number of further positive opportunities will emerge from the combination of such high quality and well located UK industrial portfolios."

Graham Burnett, USS head of property, said: " The fund has now invested in excess of £450m into UK property so far in 2009. We continue to actively pursue other opportunities of similar quality."

USS is the second largest private pension scheme in the UK with property assets totalling around £1.8bn.

King Sturge advised USS and Savills advised Segro.

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