LondonMetric buys Primark distribution unit for 60.5m pounds

FTSE 250-listed LondonMetric Property has acquired the Primark Distribution Unit, Thrapston, from the Moorfield Real Estate Fund II for 60.5m pounds.

The Thrapston unit is Primark's central distribution centre for the UK and is let to Primark Stores until October 2032 at a rental of £3.9m per annum.

LondonMetric reported that the lease benefited from annual fixed uplifts of 1.5% and upward-only open market rent reviews every five years.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The company said that the acquisition would be funded from existing resources and the purchase price reflected a net initial yield after purchasers' costs of 6.4%.

It said the acquisition would show an initial cash return of 11.5% per annum and a geared total return of over 15% per annum. The returns would grow annually as the built-in uplifts were triggered, the company added.

Andrew Jones, Chief Executive Officer of LondonMetric, commented: "We regard this as a key area for growth within our core portfolio and aim to capitalise on this dynamic further by leveraging our deep occupier relationships to secure more opportunities."

He added: "Primark is one of the UK's most successful retailers and the attractive lease terms reflect the demand/supply tensions within this sector. The investment offers excellent cash returns and exposure to prime real estate, let for nearly 20 years to a fantastic covenant, with guaranteed annual rental increases."

LondonMetric was created through the merger of London & Stamford Property and Metric Property Investments.

Following the acquisition, the LondonMetric distribution portfolio comprises 13 assets with a combined value of approximately £245m and a weighted average unexpired lease term of 13 years. This represents 22% of the enlarged LondonMetric portfolio.

LondonMetric' share price was down by 0.29% to 104.20p at 13:27 on Wednesday.

MF