- 3 October 2019
- Transport / Logistics Services
Via a sale and leaseback agreement, Menzies Distribution has sold eight last mile distribution units across the UK. Leicester based Custodian REIT (Real Estate Investment Trust) is to offer a passing rent of £1.61 million per unit to Menzies, taking a rent yield of 6.4%.
“The Portfolio is strongly aligned to Custodian REIT’s investment strategy and complementary to its existing property portfolio. The pricing advantage of pursuing a smaller lot size, regional strategy is evident when compared with pricing in the highly competitive market for logistics assets. This acquisition enhances the WAULT of the company’s property portfolio, supplements regional diversification and additionally provides secure cash flow with the certainty of fixed rental uplifts in 2024,” said Richard Shepherd-Cross, managing director of the company’s discretionary investment manager Custodian Capital.
The acquisition made by Custodian REIT was made by buying the entire issued share capital of John Menzies Property 4 Ltd, that owns the portfolio. Each of the eight properties are being leased back for 10 years initially with one unit having a second-year break option.
“Following this transaction, Menzies Distribution Limited will become Custodian REIT’s largest tenant, but still representing only 3.9 per cent of the rent roll. No one property in the portfolio will account for more than 0.7 per cent of the Company’s rent roll, supporting the continued drive to mitigate risk through diversification and stock selection. We are very pleased to enter into a long term relationship with MDL, a dynamic company offering a strong tenant covenant,” added Richard Shepherd-Cross.
“The corporate transaction offered compelling economic benefits for the company and the vendor, compared to the company acquiring the properties directly, demonstrating our commitment to enhance shareholder value and secure economies of scale through growth in the fund,” he continued.