LONDON, UK: Tritax EuroBox, in partnership with established Nordic developer MIGS, entered into a speculative development scheme to acquire 95,000 sqm of development land for SEK 223 million (€21.4 million).
The project is a brownfield redevelopment opportunity in a prime Swedish logistics market in the Fosie industrial area south of Malmö where there is a shortfall of available development land. Demand from tenants and occupiers in this highly sought-after area is strong, given its location between Malmö’s two major ring roads that provide good links to the rest of Sweden and Denmark.
The site is being acquired from the current occupier, Atria Group, a leading Scandinavian food processing group. Atria Group will continue to occupy the existing site, paying a rent of SEK 13 million (€1.25 million) per annum until their planned relocation, no later than February 2024. This will allow redevelopment of the site to commence, with completion targeted in early 2025.
The 95,000 sqm site will support construction of over 60,700 sqm of prime logistics space, with an aggregate rental value expected to be in excess of SEK 46 million (€4.4 million) per annum. The acquisition price for the existing asset is SEK 223 million (€21.4 million) and the expected future construction cost is circa SEK 680 million (€65.3 million). The value of the scheme on completion is expected to be over SEK 1.2 billion (€115 million).
This sustainable development will aim to offset carbon emissions during construction, with the completed building targeting a minimum certification of BREEAM Very Good.
This is Tritax EuroBox’s first development scheme and has a timeline to practical completion by February 2025 at the latest. This transaction allows the Company to access future development profits, whilst enjoying an attractive income yield during the planning and permitting phases.
Alina Iorgulescu, Tritax EuroBox, commented: “We are delighted to be announcing our first development project, located in one of the most sought after logistics markets in the Nordics. This exemplifies our strategic aim in building up a portfolio of high quality, sustainable logistics assets in prime markets, through partnering with local development specialists such as MIGS, adopting a disciplined approach to development and allowing the Company to access development profits.
This is our first off-market deal with MIGS and we are looking forward to developing our relationship with them on future projects.
This is the fourth Swedish investment for Tritax EuroBox, bringing our total amount invested in the country to over SEK 1.4 billion. The powerful structural trends in the Swedish market find demand outstripping supply, providing us with long-term embedded value. We see significant potential in this site in southern Malmö, which is experiencing significant demand from occupiers, while available land remains highly constrained.”