UK industrial and logistics REIT Urban Logistics announced the £23.0 million forward funding of two development sites.
Urban Logistics has exchanged contracts with Wilson Bowden Developments Limited, conditional on receipt of planning permission, for the forward funding of five high-quality urban logistics assets at Nottingham and Leicester. The development yield on cost is 6.12%.
The 8.1-acre site at Blenheim Park, Nottingham, will comprise four units with a total gross internal floor area of 166,330 sq ft. Blenheim Park benefits from a location that is 1 mile from junction 26 of the M1.
The 2.5-acre site at Optimus Point, Leicester, will comprise one unit with a gross internal floor area of 43,850 sq ft. Optimus Point benefits from a location that has direct access to junction 21a of the M1.
During construction, which is expected to commence in September 2021, the company will benefit from a 5.5% interest rate coupon on the forward funding provided. Practical completion is anticipated between September 2022 and February 2023.
The Company has an option over two further sites until July 2021 which are also in locations seeing strong rental growth and yield compression for new ‘Grade A’ stock.
“Covid-19 has highlighted the importance of warehousing and logistics real estate, especially the scarce, high-quality, single-occupier regional and last mile urban properties on which the company focuses” said Richard Moffitt, Chief Executive.
“The development programme announced today, which we have sourced off market, will add further high-quality new assets to the Company’s portfolio at a time when smaller urban logistics warehouses are in short supply. Given the strength of demand for space from occupiers seeking representation in the East Midlands market, we expect to achieve favourable lease terms on each of the assets with high quality tenant counterparties,” he added.