FTSE 100-listed property development and investment company Segro (LON:SGRO) on Wednesday said it will pay £133m to acquire a 13-acre urban warehouse site in Canning Town from Schroders (LON:SDR). announced that they had reached an agreement.
The company boasts that the property is in a prime location close to Canary Wharf and London City Airport, as well as the main roads A12 and A13, which provide direct links with the rest of central London. SEGRO adds that its employees will have easy access to the site as it is “within walking distance” of three London Underground stations in zones 2 and 3.
The company also states that Electra Park offers 21,200 square meters of leasable space across 10 units, of which nine are currently rented and the last unit is currently under recruitment.
The weighted average unexpired lease term of the leased space is 4.3 years to termination and 6.4 years to expiration. The property is expected to generate £3.4m in pass-through rents, which Segro says reflects low average local rents of around £14 per sq ft, with an estimated rental value of It is said to cost 21 pounds per square foot.
Illustrating these current low rent levels and the potential of what the company describes as an “unusual central location,” the net initial yield on acquisition is 2.3%, and once vacant, 2.6%. rise to
Commenting on the acquisition of Electra Park, Alan Holland, Director of SEGRO’s Greater London Business Unit, said:
“This acquisition is an exciting opportunity for SEGRO to strengthen its leading London footprint and fits well into our established major urban warehousing portfolio. It is located at the gateway between London properties and is in an area currently undergoing extensive redevelopment and modernization, which is already making it attractive as seen in other markets within the city. This should further improve the supply and demand relationship, creating the potential for significant rental growth.”
“Electra Park will help us build further scale in a region where we have made great progress through our East Plus partnership with the Greater London Authority. We have the opportunity to leverage our asset management expertise and local market knowledge to create value.”
Following this update and the seemingly positive Q3 results, SEGRO stock fell 1.19% or 11.20 pence to a share of P926.60 at 11:45 BST on October 21, 2020.
