Valley Road Industrial Estate sold for £11.4m

Schroder Real Estate Investment Trust, the actively managed UK-focused REIT, has acquired Valley Road Industrial Estate in Birkenhead for £11.4 million.

Unconditional contracts have been exchanged to acquire Valley Road Industrial Estate in Birkenhead, for £11.4 million, reflecting a net initial yield of 6.8%, a reversionary yield of 7.8% and a low average capital value of £60 per sq ft. The 10 acre estate comprises 190,000 sq ft of warehouse space and ancillary offices across 15 units, of which 41% by area have been recently refurbished.

The estate is located close to Junction 1 of the M53 and features a manned secure access, low site cover and good circulation. With an EPC rating of C, it offers the opportunity to improve sustainability credentials through initiatives including upgrades to LED lighting, installation of PIR sensors and improvements to insulation.

The estate is let to seven tenants generating a combined rent of £830,000 per annum, reflecting a low average rent of £4.36 per sq ft. This compares with an ERV of £950,000 per annum, or £4.99 per sq ft.

Tenants include KPFF Limited, a frozen food distribution production company, at £300,000 per annum or 36% of total income; Balfour Beatty, an international infrastructure company, at £247,200 per annum or 29% of total income; and Park Retail, a gift and voucher distribution company, at £85,910 per annum or 10% of total income.

The weighted average unexpired lease term is 4.3 years to earliest termination and approximately 10% of the estate is vacant, where the refurbishment has just been completed and where there is a 12 month rental guarantee. The majority of this space has good tenant interest.

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