CPF has added to the portfolio’s industrial weighting by acquiring a newly developed industrial warehouse in Belvedere, east London. Competition from alternative higher value land uses has squeezed industrial land availability in London in recent years which has translated to strong rental growth – this is an established trend that we anticipate continuing in the future. The property occupies a prominent and large 3 acre site fronting a main road and within walking distance to Belvedere train station. Abbey Wood station which will benefit from Crossrail is a short distance to the west.
The property extends to approximately 80,000 sq ft and is single let to Allied Hygiene Systems Limited on a new 25 year lease with a tenant break after 15 years. The starting rent is low at £7.50 per sq ft compared to neighbouring industrial estates and the income benefits from indexation to RPI capped at 4% pa and collared at 2% pa providing guaranteed income growth in the future.
The tenant has been an occupier in Belvedere over the long term so is very familiar with the location and this property serves as their new modern headquarters. The price paid was £10 million reflecting a very attractive net initial yield of 5.65%. We estimate that the value of the land alone is approximately £6 million meaning that 60% of the price paid is underpinned by the land value.
