West Midlands industrial site heads for sale at striking yield
Royal London Asset Management is nearing a deal to buy a £135m industrial estate in the West Midlands, for what is thought would be a near-record yield for the sector of around 4.25%.
The fund manager is in advanced talks to acquire the 800,000 sq ft Kings Norton Business Centre in south Birmingham from Harbert Management Corporation.
The 60-acre site, which also includes some office elements, is around 95% let and is benefitting from the last mile distribution and e-tailing boom.
Royal London Asset Management is nearing a deal to buy a £135m industrial estate in the West Midlands, for what is thought would be a near-record yield for the sector of around 4.25%.
The fund manager is in advanced talks to acquire the 800,000 sq ft Kings Norton Business Centre in south Birmingham from Harbert Management Corporation.
The 60-acre site, which also includes some office elements, is around 95% let and is benefitting from the last mile distribution and e-tailing boom.
According to Lambert Smith Hampton, research yields for all industrial asset types came in by 0.5% in the third quarter to an overall average of 5.2% following £2.2bn of stock trading – the third highest three-month period on record.
RLAM has been one of the most aggressive buyers of industrial estates in recent times and in January purchased The Birches, a 384,000 sq ft trading estate in West Sussex, from Ropemaker Properties for £65m, reflecting a 4.66% yield.
The fund manager has been flexing its muscles, including in the central London office market, having last year created the £2.7bn Royal London UK Real Estate Fund through the merger of two of its life funds.
Harbert bought Kings Norton from SEGRO in 2012 for its Harbert Europe Real Estate Fund III as part of a £204.5m portfolio deal that also included Heywood Distribution Park in Rochdale, Trafford Park in Manchester and Meteor Park in Birmingham.
It has made a substantial return from the portfolio given the growing popularity of the asset class, as well as from the further £193.8m of properties it bought from SEGRO between 2009 and 2012 when chief executive David Sleath repositioned the company to focus predominantly towards big box warehouses and away from offices and smaller assets.
These included Woodside Industrial Estate in Dunstable, Bedfordshire, which Harbert sold to LGIM Real Assets in May for £182.3m.
Knight Frank is acting for RLAM. DTRE is acting for Harbert.
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