Legal & General buys industrial portfolio from SEGRO
Segro last week announced the sale of six industrial estates in London for £38.2m to the Industrial Property Investment Fund, managed by Legal & General Property.
The six freehold estates have a total lettable space of 43,114 sq metres. The portfolio comprises Abbeydale Road, the Bush Industrial Estate and Brent Crescent in Park Royal, David Road/Willow Road in Poyle, the Crusader Industrial Estate in Haringey and the Blackwall Trading Estate in Poplar.
Segro says the portfolio has a current vacancy rate of 15.4% by ERV and a weighted average unexpired lease term of 2.7 years to earliest expiry. The selling price represents a net initial yield of 6.2%, or 8.5% including rent top-ups and guarantees.
Chief executive David Sleath said the sale was part of Segro’s strategy of focusing on its larger holdings and higher-quality assets in core markets. Segro has sold £89m of assets so far this year, including its share of joint venture disposals.
Mr. Sleath said the sale showed that, despite uncertain economic conditions, there was still good demand from investors for industrial properties. Jonathan Holland, senior fund manager at Legal & General Property, believes that the properties offer added-value opportunities over the long term.
“Industrial property in London has seen a stronger recovery than the rest of the UK and, whilst occupier demand across the UK looks set to continue to be weak, London, boosted by international trade and tourism as well as an improving finance and business sector, should support downstream demand for smaller industrial occupiers. As a result of this transaction, the Fund’s London weighting increases from 29.7% to 32.3%,” Mr. Holland added.
Doherty Baines advised Segro on the disposal and Jones Lang LaSalle advised Legal & General Property.
