Barnsley logistics centre sold in £30m deal

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Investors have agreed a £30m deal for a logistics and distribution centre in Barnsley.

A joint venture between Credit Suisse and Westmount Real Estate has bought the Park Spring Road unit from a private property investment company.

The deal for the 492,000 sq ft warehouse has a capital value of £60 per sq ft and a net initial yield of 6.3 per cent.

The unit is currently let to fitted bedroom, kitchen and bathroom supplier Symphony on a 25-year lease.

It is the second of Symphony’s leased industrial units to change hands in recent months, after a deal £14.6m deal was struck for its Rotherham industrial unit in September.

Symphony’s lease on the Park Spring Road site is at an initial rate of £1.98m, with five-yearly rent reviews. It also provides a tenant break in year 20.

Sheffield-based agency Commercial Property Partners (CPP) advised Credit Suisse and Westmount Real Estate on the deal, while Knight Frank acted on behalf of the vendors.

CPP partner Toby Vernon said logistics and distribution has had a stellar year, which he expects to continue into 2015.

He said: “The strength of the logistics and industrial distribution sector in South Yorkshire, driven by a skilled and competitive labour force and an excellent motorway network, is proving highly attractive with investors.”

In addition to the Barnsley distribution unit, Knight Frank also advised the sellers of Symphony’s Rotherham site.

Partner and Leeds office head Henrie Westlake said: “This is one of the most significant investment deals in Yorkshire this year.

“The region continues to be popular with investors and this sale underlines that well-located assets, with proven occupiers on long-leases, will always prove attractive.”

Mr Westlake told The Yorkshire Post the business had been “taken aback” by the level of investor interest in both deals.

“The investor demand for logistics has never been stronger,” he said.

“This is true nationwide, but in Yorkshire in particular.”

There is an “enormous weight of money” flowing into the sector, as foreign investors recognise the attraction of units outside of the South East, he said.

Investors are attracted by the long leases, solid covenants and long-term income streams provided by pre-let distribution centres.

The success of logistics and distribution is the result of a “virtuous circle”, Mr Westlake said.

“Values had fallen so far, then around a year ago there was significant investment from private equity houses in the US, as they recognised the regions offered cheaper sites than in London,” he said. “As the investors arrived, that pushed prices up, which meant property performed better, which attracted more money and accelerated the market.

“Investors have really created their own market in the last year.”

Values for some properties have now returned to the level they were at at the peak of the market, he added.

Mr Westlake said he anticipates next year’s performance to be more steady that what has been seen in 2014.

There are also questions around rental levels.

He said: “There has been so much yield compression, we’re not sure how much more of that there can be.”

The Barnsley deal is the latest in a number of large distribution transactions in the region.

Last week, Mayfair Capital announced it had acquired the Latitude 135 Wakefield distribution centre in a £9.29m deal.

The firm acquired the 135,000 sq ft unit from Wilton Developments. The unit has a 10-year lease with Scottish logistics firm Malcolm Group at a rent of £4.55 per sq ft.

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Another of Symphony’s distribution units attracted strong investor interest in September.

The Ickles Way site was bought by Standard Life Investments Property Income Trust for £14.6m with a seven per cent yield.

The site comprises three buildings totalling 360,000 sq ft. Symphony currently holds a 20-year lease on the property, at initial rent of £1.08m.

Savills advised the trust on the purchase. Mark Wilson, associate director of investment at Savills, said: “The property is situated in one of the most established industrial locations in the region and offers inflation linked, long term income.”