Supermarket chain buys £85m shed as it continues southern expansion
Morrisons has agreed to buy a 920,000 sq ft distribution unit in Kent from Standard Life Investments and Gazeley for around £85m in one of the largest deals in the industrial market this year.
Morrisons originally agreed a prelet on the building at G.Park Sittingbourne in March this year – the south-east’s largest-ever prelet.
However, its policy is to buy freeholds across its estate whenever possible. As such, when Standard Life and Gazeley approached investors to buy the scheme, the supermarket operator made its intentions clear.
It is thought that a number of potential investors looked at the shed when it came to the market, including German fund managers such as Commerz Real, which offered around £85m. Morrisons, which will pay in stages between exchange and completion in 2009, is believed to have offered about the same figure.
Nigel Godfrey, development director at Gazeley, said: ’At a time when other retailers are being hit by a slowdown in consumer spending, the move by Morrisons to purchase the investment of this development sends out a positive message about our product. Morrisons did everything they said they would do, and exchanged within seven days.’
Food retailers have been one of the driving forces keeping the industrial occupational market going. In the first quarter of 2008, food retailers accounted for a ‘huge’ market share of 61% of take-up in sheds above 100,000 sq ft, says King Sturge’s latest report. In 2007, they accounted for around 20%.
Morrisons is also planning to open more stores in the south-east and expand its 375-store portfolio, after reporting strong interim results in September.
It is thought to have hired agents to search for new stores in the south, where it is most under-represented. The latest TNS market research shows Morrisons is the UK’s fastest-growing supermarket with sales up 9.2% year on year.
In its September interim results statement, Morrisons’ profit before tax was up by £309m, or 12.9%, in the first six months to 3 August.