LONDON: Warehouse REIT announced the acquisition of two adjacent distribution warehouses in Harlow, totalling 177,000 sq ft, for £13.9 million including costs.

The purchase price reflects a net initial yield of 8.6%.

Situated in the heart of the established Templefields industrial area, Harlow’s premier industrial and distribution location, the property comprises two modern units of 115,000 sq ft and 62,000 sq ft respectively.

It generates £1.2 million of contracted rent per annum which equates to a low passing rent of £6.72 psf, offering significant potential for rental growth.

The larger unit is let to the UK subsidiary of a global beauty & cosmetics company, with over four years remaining on the lease, and reflecting the strategic location, serves as its primary UK distribution hub.

The second unit is occupied by a specialist in shop fittings and supplies, currently assisting retailers with H&S and PPE, on a short term lease.

Harlow is an established commercial centre in the South East, located in the north east quadrant of London’s Orbital M25 motorway and 30 miles (45 km) north of Central London.

It forms part of the London commuter belt, with approximately 200,000 people living within a 6 mile (10 km) radius. It benefits from excellent arterial connectivity, 4 miles (6 km) from Junction 7 of the M11 and 8 miles (13 km) from Junction 27 of the M25.

The South East industrial market continues to be characterised by strong take up with a number of major international and national retailers, 3PLs and manufacturers basing their national distribution operations in the region in order to benefit from the proximity to London, the South East and the Midlands.

Harlow is especially attractive to occupiers due to a combination of readily available labour at comparably lower rates and discounted rental levels versus other M25 orbital locations.

Andrew Bird, Managing Director of the Investment Advisor, Tilstone Partners Limited, commented: “Harlow is a highly sought after and fast growing South East industrial location offering access to a significant portion of the UK population in a relatively short drive time.

These acquisitions fit with the Company’s strategy of acquiring a mix of strong day one income, near term lease events allowing us to capture the reversion as well as longer term asset management opportunities.

“Despite increasing investor appetite for industrial exposure, the strength of our UK wide origination capability means we are constantly screening new opportunities. Advanced due diligence and negotiations are underway on several assets that meet Warehouse REIT’s investment criteria, at both an individual asset and portfolio level.”

Warehouse REIT plc invests in and manages urban and ‘last-mile’ industrial warehouse assets that support the continued growth in e-commerce. http://www.warehousereit.co.uk